Is the Budget good news in Payroll Land?
So the Chancellor has raised the Higher Rate income tax personal allowance threshold from £45K to £46,350 from April 2018, and the Lower Rate Threshold will increase by £350 to £11,850.
This means that the new tax codes will increase from 1150L to 1185L in April 2018.
For a typical worker who pays tax in 2018-9, this will be a £1075 reduction in their tax paid, and a Full time Worker who is on the National Living Wage will take home more than £3,800 extra in their wage packet.
But is this good news for the typical worker? Well, the increase in personal allowance may be less generous than you think, since at just over 3%, it was only just in line with inflation!
Given that National Insurance is payable at a rate which is more than £3K below that of income tax, the lowest paid taxpayers may query whether the increase in personal allowance is the right way to support them?
Let me know your thoughts!