Personal Allowance to rise to £12,500
Higher Rate income tax threshold to rise to £50,000
Employee National Insurance to be paid at 12% on annual salary between £8,632 and £50,024
No changes to additional rate or savings income starting rate
Richmond House Wealth Management view: The quoted cost of this at around £2.8 billion, has been ‘found’ from improved growth and a fall in expected borrowing figures. It also allows some leeway for the Chancellor to make any future increases less benevolent as the manifesto promise from 2016 has been achieved a year early. There is however a National Insurance ‘trap’ that limits the benefit of the increase in Personal Allowance. The lower-paid only benefit from an inflation-linked rise in the NI contribution threshold and those removed from Higher Rate tax will find the level up to which they must pay 12% contributions also rises in line with the change to the tax threshold. It is likely to have a positive effect, but perhaps one that is not as great as it may first appear.