The income tax personal allowance increases to £10,000 from 6 April 2014 for those born after 5 April 1948.
Broadly, income over the personal allowance is taxed at the following rates:
- Basic rate (up to £31,865 over the personal allowance) – 20%
- Higher rate (£31,866 to £150,000) – 40%
- Additional rate (over £150,000) – 45%
Looking forward, the Chancellor has announced that the income tax personal allowance will rise to £10,500 from 6 April 2015, and the level at which higher rate tax will be paid will be set at £31,785.
From 6 April 2015 the starting rate of tax on savings income will be reduced from 10% to 0%, and the maximum amount of income subject to the 0% rate will be increased to £5,000.