New tax cut will give workers another £100

Self-employed Tracy Eydmann works part-time in sales. Picture: Jane Barlow

WORKERS will be granted a tax cut in their pay packets, as the Chancellor announced the personal tax allowance would be increased to £10,500 next year – adding around £100 a year to the income of the typical earner.

The figure, which represents the amount employees can enjoy tax-free before the basic tax rate kicks in, is already due to increase this April to £10,000.

“In this Budget, we make sure hard-working people keep more of what they earn and more that they save,” George Osborne told the House of Commons, adding that the average worker would have benefited by £800 less income tax since his government came to power in 2010. “I am incredibly proud of what we have achieved.”

The UK government has been raising the allowance since it came to power four years ago, when the limit was £6,475.

Mr Osborne said the move would mean three million more of the lowest-paid people in the country would now be exempt from paying any tax altogether.

Higher-rate taxpayers will also have a reprieve, as the level at which the upper rate kicks in will rise below inflation next month to £41,865, and then to £42,285 in 2015-16.