What are the increases in personal allowances?

The chancellor made a surprise announcement with a small unexpected give away.

We had been expecting personal allowances to increase from £9,440 to £10,000 for 2014/15. It was announced that the allowance will be further increased to £10,500 for 2015/16 effectively giving all taxpayers with taxable income of at least £10,500 an additional tax saving of £100.

In previous years of this coalition government where the personal allowance has been increased, there has been a corresponding reduction in the basic rate band to ensure that higher rate tax payers did not benefit. This has been reversed with the higher rate threshold increasing from £41,450 in the current tax year to £41,864 in 2014/15 and again to £42,285 in 2015/16.

We have confirmation that for married couples and civil partners where neither party is liable to tax at a rate above the basic rate to transfer up to £1,050 of their personal allowance to their partner. This will offer a tax saving where one person is not utilising their personal allowances of a maximum of £210. This takes effect for 2015/16.

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