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Tax Tax

Increase the personal allowance to £12,500

Last updated: 09:25am 2 November 2018

By 2020, we will, as promised, increase the personal allowance to £12,500 and the higher rate to £50,000.

Conservative Party Manifesto 2017, p.14

Our verdict

Let’s first clarify what the “personal allowance” is. It’s basically the amount of money you can earn before you start being taxed. It’s currently set at £11,850. Therefore, if you earn less than the personal allowance, you do not have to pay any income tax at all. If you earn more than the personal allowance, you only pay tax on earning above that amount.

The manifesto pledge here is referring to the “standard” personal allowance that most people qualify for. Some people may have bigger personal allowances if they claim Marriage Allowance or Blind Person’s Allowance, or smaller personal allowances if their income is over £100,000.

The Conservative Party set this “standard” £12,500 target back in their 2015 manifesto, so this is a continuation of the promise made back then.

So what has the government done so far? Well, in the 2017 Autumn budget, the government announced an increase in the personal allowance to £11,850 beginning from April 2018. So that was progress towards the goal. Since then, in the 2018 Autumn budget, it was announced that the personal allowance will rise to the promised £12,500 in April 2019 – so a year earlier than the 2020 deadline they had set themselves.

We’re marking this policy as ‘in progress’, though it’s fair to say this is pretty much a done deal. Assuming nothing changes in the meantime we will mark this as ‘done’ in April 2019 when the increase to £12,500 takes effect. Follow this policy for updates.

Useful reading

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