At the Budget, the Chancellor announced that increases to the personal allowance and basic rate band for 2019/20.
The personal allowance is currently £11,850. The personal allowance for 2019/20 will be £12,500.
Also for 2019/20, the basic rate band will be increased to £37,500 so that the threshold at which the 40% band applies is £50,000 for those who are entitled to the full personal allowance. The additional rate of tax of 45% will remain payable on taxable income above £150,000.
The government had pledged to raise the thresholds to these levels by 2020/21.
The GOV.UK website has the following to say.
Who is likely to be affected
Income Tax payers, employers and pension providers.
General description of the measure
This measure increases the Personal Allowance to £12,500 for 2019 to 2020. The basic rate limit will be increased to £37,500 for 2019 to 2020. As a result, the higher rate threshold will be £50,000 in 2019 to 2020.
This measure will set the Personal Allowance at £12,500, and the basic rate limit at £37,500 for 2020 to 2021. The higher rate threshold will be £50,000 in 2020 to 2021.
From 2021 to 2022 onwards, the Personal Allowance and basic rate limit will be indexed with the Consumer Price Index (CPI).
Changes to the basic rate limit, and higher rate threshold, will apply to non-savings, non-dividend income in England, Wales and Northern Ireland, and to savings and dividend income in the UK.
This policy ensures the government’s commitment to raise the Personal Allowance to £12,500, and the higher rate threshold to £50,000 is fulfilled a year early.
Background to the measure
The government has an objective to raise the Personal Allowance to £12,500, and the higher rate threshold to £50,000 by 2020 to 2021.
This measure will increase the Personal Allowance for 2019 to 2020 to £12,500, and the basic rate limit will be increased to £37,500 for 2019 to 2020. As a result, the higher rate threshold will be £50,000 in 2019 to 2020. This meets the government’s objective one year early.
Changes to the basic rate limit will apply to non-savings and non-dividend income in England, Wales and Northern Ireland and to savings and dividend income in the UK. Since April 2017, the Scottish Parliament sets the basic rate limit and higher rate threshold for non-savings, non-dividend income for Scotland.