2011/2012 Tax allowance Published

Details have just been published by HMRC announcing the proposed personal tax allowance for tax payers for 2011/2012 is to be set at £7,475, this is an increase of £1000 from 2010/1011.

The increase in personal allowance is usually set by the retail price index and is therefore based on inflation, currently a 4.6% increase year on year. This should set the personal allowance for 2011/2012 at £6,785, however, the higher increase to the personal allowance for those aged under 65 will contribute to the government’s objective of a fairer tax system by providing support to individuals on low and middle incomes.

The basic rate threshold will be reduced to £35,000 from £37,400, meaning that those on higher incomes will not benefit from the increase to the personal allowance.

It is always worth remembering however, that there is still time for the governemnt to back-track on this decision altogether, I will keep you posted!