Personal allowances

Increase for basic rate taxpayers

Plans were announced by the Chancellor to make permanent this year's increase in the income tax personal allowance of £120 a year for basic rate taxpayers.

From April, the personal allowance for those under 65 increased by £145. This is in addition to the £600 increase this May, and raises the total to £6,475.

Taxpayers aged between 65 and 74 will see their personal allowance increase in line with inflation to £9,490, while those aged 75 and over will get an annual allowance of £9,640.

The government said this meant that from April 2009 anyone aged 65 could earn up to £182 a week before being taxed.

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