Emergency Budget: Income tax allowance increased

Emergency Budget: Income tax allowance increased
Emergency Budget: Income tax allowance increased

By Tobias Benedetto

The personal income tax allowance will be increased by £1,000 in April 2011, it was confirmed, as George Osborne confirmed a key plank of the Liberal Democrat manifesto in his emergency Budget.

The rise to £7,475, at a cost of £3.7 billion, is the start of a drive to meet the coalition's long-term objective - and a key Lib Dem policy - of raising personal allowances to £10,000.

The measure will take the country's 880,000 lowest earners out of income tax altogether.


Income tax reform has long been a key agreement in the coalition government, with negotiators seizing on the policy as a workable ideological overlap soon after the election.

Lib Dem strategists say the measure will contribute to the economy, rather than just suck money from the Treasury.

Low-earners who benefit most from the move are the group most likely to spend the money, raising the prospect of increased income from VAT.

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