Tax Rates 2012 - 13

Who is likely to be affected?
Income tax payers, employers and pension providers.
 
General description of the measure
For 2012-13, legislation in Finance Bill 2012 will increase the personal allowance for those aged under 65 to £8,105 and reduce the basic rate limit to £34,370.
 
Policy Objective
The increase to the personal allowance for those aged under 65 will make the tax system fairer by providing support to individuals on low and middle incomes and by increasing the rewards to work.
 
The reduction to the basic rate limit means the higher rate threshold (the sum of the personal allowance and basic rate limit) is not affected by this announcement.  This ensures no additional higher rate taxpayers are created, and that most basic and higher rate taxpayers will gain from the increase in personal allowances by the same amount.
 
Background to the measure
Following the £1,000 increase in the personal allowance for 2010-11, this £630 cash increase is the next step towards the Government's longer-term commitment to increase the personal allowance to £10,000.
 
Operative Date
The measure will have effect on and after 6 April 2012.
 
                                                                        2010-11      2011-12      2012-13
Personal allowance for those aged under 65                £6,475        £7,475        £8,105
Basic rate limit                                                     £37,400      £35,000       £34,370