2016 Autumn Statement - key points
Autumn Statement 2017: Key points on personal taxation
Here's our summary of the key points from the Autumn statement, and how they could affect you. We've made it as brief as possible, so you can get the main points without the rest..
- Increases in income tax thresholds will go ahead as planned as the Government backed away from making changes to the existing schedule in today's Autumn Statement. For the 2017-18 tax year the personal allowance - the level at which income tax begins to be paid - will rise from £11,000 to £11,500. At the same time the higher-rate, 40pc, income tax threshold will rise to £45,000.
- Philip Hammond, the Chancellor, has pledged that the thresholds will rise again to £12,500 and £50,000 respectively by the end of the current parliament in 2020. After this point, the personal allowance will rise in line with the consumer prices index measure of inflation, rather than the national minimum wage as currently, Mr Hammond added. This will bring the way the allowance is increased into line with the higher-rate threshold. The chancellor of the day will have discretion to raise the thresholds by more than the CPI.
- The additional-rate or 45pc threshold is unchanged, as is the "income limit" of £100,000. The personal allowance goes down by £1 for every £2 of income about this limit.
- Income tax thresholds have risen steadily over recent years - meaning higher earners are paying an ever-increasing proportion of the state's total tax receipts. The bottom 50pc of the population, by pre-tax income, are forecast to contribute just 9.9pc of all income tax in 2016-17. The wealthiest 50pc pay the remaining 90.1pc, HMRC figures show.
- Mr Hammond also confirmed that National Insurance paid by employers and employees will be aligned from April 2017. This means NI will begin to be paid on weekly earnings of more than £157.