Chancellor's Announcement
Alistair Darling has announced changes to the personal tax system to help basic rate taxpayers affected by the abolition of the 10% starting rate of income tax.
The Chancellor announced that the personal allowance for the 2008-09 tax year will be increased by £600 from £5,435 to £6,035, and the threshold at which someone starts to pay higher rate tax will be reduced by £600.
This means that the tax payable by higher rate taxpayers will remain the same. Basic rate taxpayers will see a reduction in their overall 2008/09 tax bill of £120.
The Chancellor backdated this announcement to 6th April 2008 with implementation in September 2008.
Pensioners and employed individuals will see an increase in their September pension or net pay of up to £60 and then a reduction each month up to March 2009 of up to £10 from their current tax bills.