The income tax personal allowance is to rise to £10,800 next year and £11,000 the year after, making typical working taxpayers £900 a year better off.
Chancellor George Osbourne outlined a number of changes to tax and savings in the government’s final Budget before May’s general election.
An above-inflation rise in threshold for 40p income tax rate from £42,385 this year to £43,300 by 2017/18, was also announced, while the transferable tax allowance for married couples is to rise to £1,100.
The share of income tax paid by the top one per cent of earners is projected to rise from 25 per cent in 2010 to more than 27 per cent this year. Employers’ national insurance for under-21s will be abolished from this April and for young apprentices from next April.
A “major review” of the business rates system and the reduction in the annual investment allowance is to be set at a rate “much more generous” than £25,000.
The annual tax return will be abolished altogether, replaced by digital and online systems. A penny a pint will be knocked off beer duty, cider duty will be cut by 2 per cent and duty on Scotch whisky and other spirits also cut by 2%. Wine duty will be frozen and duties on tobacco and gaming also unchanged.
It’s a nonentity of a budget - it won’t upset people but a lot was already there
The fuel duty increase which was scheduled for September is cancelled. The pension pot lifetime allowance to be reduced from £1.25m to £1m from next year, saving £600m annually.
Jerry North, manager of St Nicholas Arcades, said it was a “typical pre-election budget”.
“It’s good that they’ve extended business rates relief for small businesses but the personal allowance increase, we all knew that was coming.
“It’s a nonentity of a budget - it won’t upset people but a lot was already there.”