Budget 2015: Mini tax cut announced
The majority of people will get a small tax cut over the next few years, under changes to the personal allowance announced by Chancellor George Osborne today. Meanwhile, you'll need to earn more to pay the higher rate tax.
Most of us have a 'personal allowance', which is the amount we can earn without paying any income tax. Your specific personal allowance depends on your age and, in some cases, your salary.
The current personal allowance for under 65s earning less than £100,000 a year is £10,000. This will rise to £10,600 in April this year, as already planned.
See our Tax Rates guide for a full break down of what the taxman gets, including information for those aged over 65, and those earning over £100,000.
But today's announcement will see the threshold for under 65s earning less than £100,000 a year raised further to £10,800 in April 2016 and to £11,000 in April 2017 (see our Income Tax Checker where we will update it with the new allowance figure).
Osborne says this will cut tax for 27 million people and take almost four million people out of paying income tax altogether.
The threshold at which people pay higher rate tax will also rise from £41,866 now, to £42,385 in April (as planned), to £42,700 in 2016, and to £43,300 in 2017.
See the table below for a summary of what your take home pay will be this tax year, and in 2015/16, after both tax and National Insurance:
What is my take home pay?
| Salary (pre-tax) | Take home pay 2014/15 | Take home pay 2015/16 | ||
|---|---|---|---|---|
| £10,000 | £9,755 | £9,767 | ||
| £20,000 | £16,555 | £16,687 | ||
| £30,000 | £23,355 | £23,487 | ||
| £40,000 | £30,155 | £30,287 | ||
| £50,000 | £36,142 | £36,326 | ||
| Calculations factor in National Insurance and Income Tax. This does not apply to the self-employed. | ||||
What's the personal allowance for over 65s?
At present the personal allowance for those born between 6 April 1938 and 5 April 1948 differs depending on how much you earn. For those earning under £27,000 it's £10,500. This will rise to £10,600 from 6 April 2015, to £10,800 in 2016, and to £11,000 in 2018.
For those born before 6 April 1938, again the allowance differs depending on how much you earn. If you earn under £27,000 your current personal allowance is £10,660, which will fall to £10,600 from 6 April 2015, to £10,800 in 2016, and to £11,000 in 2018.
For the full details of the personal allowance on all earnings and for all ages brackets, see our Tax Rates guide.
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10 September 2024
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