
Chancellor Philip Hammond has announced the personal allowance for income tax will be increased from £11,500 to £11,850 from April 2018, while the threshold at which you pay a higher rate of income tax will rise from £45,000 to £46,350.
The announcement in today's Budget means most taxpayers will be able to earn £11,850 before they pay a penny of income tax from the start of the next tax year.
The change to the personal allowance will mean an extra £70 in your pocket if you're a basic-rate taxpayer and an extra £140 for higher-rate earners.
Despite pre-Budget speculation, there was no announcement on bringing forward the personal allowance limit to £12,500. It had been suggested in the Conservative Party manifesto that this would happen by 2020.
In addition to raising the personal allowance, the higher rate – the point at which you start paying 40% tax – will be raised from £45,000 to £46,350. This will give somebody earning £50,000 a year an extra £270 a year (on top of the extra £140).
For more information on income tax, see our Tax Rates 2017/18 guide.
What is the personal tax allowance?
Those earning under £100,000 can currently earn £11,500 a year without paying income tax (though you do have to pay national insurance).
For those earning over £100,000, the personal allowance goes down by £1 for every £2 of income above the £100,000 limit. Those earning £123,000 or above do not get a personal allowance.
The personal allowance was most recently raised in April this year, from £11,000 to £11,500.

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