The majority of workers will pay less in tax from April next year, after Chancellor George Osborne has today announced that the amount people can earn tax free will rise.

From April 2015, the Government will raise the amount of income workers can earn before they pay tax to 10,600 (see our Income Tax Checker for what you pay now).

The current personal allowance is 10,000 and was due to rise to 10,500 next April.

The Government says the increase in the personal allowance will mean 24.4 million people pay less tax, while a further 430,000 will no longer pay any income tax in 2015-16.

The higher-rate tax threshold, above which income is taxed at 40%, will also increase from 42,285 to 42,385 in 2015-16 as a direct result of the move to up the tax free personal allowance.

See our table below for a summary of the new tax thresholds:

Income tax thresholds
Tax year Personal allowance for under-65s (you pay no tax on this amount) Basic rate (20%) - paid on earnings between Higher rate (40%) - paid on earnings between Additional rate (45%)
2014/15 10,000 10,000-41,865 41,865 to 150,000 Over 150,000
2015/16 10,600 10,600-42,385 42,385 to 150,000 Over 150,000

This is just the tax you pay, most people also pay National Insurance contributions.

Martin Lewis
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See the tables below for how much take home salary you'll get this tax year compared to next tax year once National Insurance contributions have been factored in.

2014/15 take home pay
Salary (pre-tax) Tax paid National Insurance paid Take home salary (post tax)
10,000 0 245 9,755
20,000 2,000 1,445 16,555
30,000 4,000 2,645 23,355
40,000 6,000 3,845 30,155
50,000 9,627 4,231 36,142
60,000 13,627 4,431 41,942
70,000 17,627 4,631 47,742
80,000 21,627 4,831 53,542
90,000 25,627 5,031 59,342
10,000 29,627 5,231 65,142

This table is just for people who are employed. It doesn't apply to the self-employed.

2015/16 take home pay
Salary (pre-tax) Tax paid National Insurance paid Take home salary (post tax)
10,000 0 232.80 9,767.20
20,000 1,880 1,432.80 16,687.20
30,000 3,880 2,632.80 23,487.20
40,000 5,880 3,832.80 30,287.20
50,000 9,403 4,271.30 36,325.70
60,000 13,403 4,471.30 42,125.70
70,000 17,403 4,671.30 47,925.70
80,000 21,403 4,871.30 53,725.70
90,000 25,403 5,071.30 59,525.70
10,000 29,403 5,271.30 65,325.70

This table is just for people who are employed. It doesn't apply to the self-employed.

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