Chancellor George Osborne has today (3 December) announced that the higher rate tax threshold for UK workers will go from £41,865 this year to £42,354 next year.
In his Autumn Statement he said that this was the first increase in the higher threshold in line with inflation for five years.
“This year’s increase means 138,000 fewer people will pay the higher rate than would otherwise be the case.
“And it is a down-payment on our commitment to raise the higher rate threshold to £50,00 by the end of the decade.
Mr Osborne also announced a rise of the tax-free personal allowance. It was set to rise to £10,500 next year, but will instead increase to £10,600.
Mr Osborne said: “That’s a total wage boost for working people of £825 a year. It means three and a half million of the lowest paid will now be taken out of tax altogether. I just wanted to flag that up.
“It is the first step to the new goal we have set of raising the personal allowance to £12,500 – so that people working full time on the minimum wage pay no tax at all.”
Mr Osborne also said the increase of research and development tax creidt for small and medium enterprises to 230 per cent and the credit for large firms to 11 per cent.
He added that the Small Business Rate Relief would be doubled again for another year.
“The government has repeatedly helped small businesses deal with the burden of business rates. We do so again today.”
He added: “It benefits half a million firms, means a third of a million firms pay no rates and we’ll continue to fund it.”
Mr Osbone also announced that he would continue to cap the inflation-lined increase in business rates at 2 per cent.
He said: “And I am announcing a full review of the structure of business rates, and I urge business groups to engage with us.
“Last year to help our high street shops, pubs and cafes, I introduced a new £1,000 discount on their rates.
“With the brilliant Small Business Saturday this weekend, I am increasing that help for the high street by 50 per cent to £1,500 next year.”
ruth.gillbe@ft.com
