What is changing about Personal allowance in 2024?

Personal allowance

Every eligible taxpayer residing in the United Kingdom has the right to claim a personal allowance. Applicable to all forms of income for tax purposes. The set allowance for the fiscal year 2023/24 is £12,570.28.

Since April 2010, individuals with incomes surpassing £100,000 have had their personal allowance gradually withdrawn. The reduction occurs at a rate of £1 for every £2 exceeding this income threshold until fully withdrawn. This income limit remains unchanged for the 2023/24 fiscal year.

In May 2010, the Coalition Government declared its intention to significantly raise the personal allowance. Starting at £6,475 for 2010/11 and progressing to £10,000 by the end of the 2010-15 Parliament. The annual increase continued, reaching £10,000 for the 2014/15 fiscal year. Following the 2015 General Election, Chancellor George Osborne, in the Conservative Government’s inaugural Budget, pledged to raise the allowance to £12,500 and the higher rate threshold to £50,000 by the Parliament’s conclusion.

In the 2018 Budget, Chancellor Philip Hammond affirmed that the personal allowance and higher rate threshold would be fixed at £12,500 and £50,000, respectively, for the 2019/20 fiscal year. Furthermore, he announced a freeze for both in the 2020/21 fiscal year. Followed by adjustments aligned with CPI inflation from the 2021/22 fiscal year onward.

During the Spring 2021 Budget, Chancellor Rishi Sunak declared that the personal allowance would be held constant at £12,570 from April 2022 for a four-year duration spanning 2022/23 to 2025/26. In the Autumn Statement 2022, Chancellor Jeremy Hunt extended the freeze for an additional two years, continuing until April 2028