tax

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.