The personal allowance remains at £12,500 for both this tax year and 2020/21 and was left unchanged in the Budget, reports Pat Sweet
But there was some tax relief for earners with the £104 average increase in earnings due to the increase in the national insurance contributions (NICs) threshold which is going ahead as planned, up from £8,632 to £9,500 in April.
The Conservative manifesto in the run up to December’s general election promised no increase in income tax, VAT or NICs.
The income limit for the personal allowance also remains unchanged at £100,000 but the income limit for married couple’s allowance is set to increase from the current £29,600 to £30,200 in 2020/21.
The Budget also contained details of a future call for evidence on pension tax administration. Those earning around or below the level of the personal allowance and saving into a pension may benefit from a top-up on their pension savings equivalent to the basic rate of tax, even if they pay no tax. Whether they receive this top-up depends on how their pension scheme administers tax relief.
The government has committed to reviewing options for addressing these differences and will shortly publish a call for evidence on pensions tax relief administration.
