Income tax rates change in Budget 2016
The amount of tax you pay is changing, after Chancellor George Osborne announced cuts to income tax in his latest Budget.
The personal tax allowance will rise to £11,500 in April 2017, from £11,000 in April this year. When the rate changes in 2017, basic rate taxpayers will consequently pay £3.46 less each week in tax, compared to the current personal allowance which is £10,600.
The higher rate threshold will also increase, from the current £42,385, to £43,000 this April, and then rise up to £45,000 in April 2017. The higher rate income tax is charged at a rate of 40 per cent.
The Conservative party has stated that it will aim to increase the personal tax allowance to £12,000 by 2020-21, with the higher rate threshold intended to rise to £50,000.
To summarise, from April 2017, you will pay no tax on the first £11,500 you earn, then 20 per cent on the next £33,500 you earn, then 40 per cent on the next £105,00, and finally 45 per cent on any earnings above £150,000.
Another tax was also raised in the Budget. Insurance Premium Tax (IPT) will rise from 9.5 per cent to 10 per cent.