In his Budget speech, Chancellor Gordon Brown confirmed the rates he indexed increases for personal income tax allowances announced in December’s Pre-Budget Report.
The basic personal allowance will be £4,895 – a £150 increase to allow for inflation. The age-related personal allowances have been increased in line with earnings to £7,090 for those aged 65 to 74 and £7,220 for those aged 75 or over.
Full details are available in Press Notice 02 Income tax rates and allowances, national insurance contributions and other tax and duty rates for 2005-06.
The Chancellor said he had considered suggestions to raise the personal allowances further, but decided it would be more effeictve to raise the Child Tax Credit by £5 a week – delivering £260 a year to a family in work on median earnings (£23,400 a year) with two children, as opposed to £40 that an increased personal allowance would provide.
Compared with last year, a single-earner couple with two children, with earnings up to the median for full time workers will be at least £150 a year better off in real terms, the Chancellor claimed. A single earner family with two children, on average male earnings of £31,000, would be £205 a year better off in real terms.
Championing the government’s record on employment, the highest ever figures recorded, Brown said that that personal household wealth had rocketed by some 50%.
