Chancellor George Osborne Announces Further Increase in Personal Tax Allowance

Strategic Insights -

The UK Government has announced plans to further increase the personal tax allowance for the 2012/2013 tax year, saving people pounds 48 a year in real terms, or pounds 126 in cash terms. This boost will benefit around 25m people, with 1.1m expected to be lifted out of paying income tax altogether. The move aims to simplify the UK's complex tax regime and align income tax and National Insurance systems.

Key Takeaways:

  • The personal tax allowance will increase by pounds 630 to pounds 8,105 for the 2012/2013 tax year, benefiting around 25m people.
  • This increase will save people pounds 48 a year in real terms, or pounds 126 in cash terms.
  • The change will lift 1.1m people out of paying income tax altogether, bringing the UK closer to its aim of ensuring that no one earning less than pounds 10,000 pays any income tax.
  • The Government plans to consult on merging the income tax and National Insurance systems to simplify the tax regime and eliminate unnecessary costs and complexity.
  • Chancellor George Osborne emphasized that this move would not lead to higher taxes for pensioners, as National Insurance is not paid by pensioners and others who rely on investments for their income.

Statistics:

  • The personal tax allowance will increase by pounds 630 to pounds 8,105 for the 2012/2013 tax year.
  • This increase will save people pounds 48 a year in real terms, or pounds 126 in cash terms.
  • Around 25m people will benefit from this increase.
  • 1.1m people are expected to be lifted out of paying income tax altogether.
  • The Government aims to simplify the tax regime and eliminate unnecessary costs and complexity.

Sources:

  • Chancellor George Osborne, speech to Parliament ( annotation not available)
  • Government press release, "More help for working families and pensioners" (2012)