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Income tax rates, allowances and NI thresholds

The Government has announced that the rates of income tax will remain the same and the thresholds will be decided for 2011/12 at the usual time, probably in October 2010.

The announcements made today include:

  • The personal allowance for those aged under 65 will be increased by £1,000 to £7,475 for the benefit of those who are not higher rate taxpayers.
  • The basic rate threshold will be reduced so that higher rate taxpayers do not benefit from it.
  • The alignment of both the Upper Earnings and Profits Limits for NI purposes with the higher rate income tax threshold will be maintained by reducing the NI limits as appropriate.
  • The point at which employers start to pay Class 1 NICs is to be increased by an extra £21 above indexation but the previous Government’s 1% rise for employees remains.

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