Welcome for income tax cut for lower paid

New figures show that the Government has cut income tax for 3,040,000 people across the South East, resulting in 98,000 of the lowest paid being taken out of tax altogether. Across the country, 22.6 million people have had an income tax cut worth £200 this year, and 830,000 have been taken out of tax.

The increase in the income tax personal allowance of £1,000, announced at the June 2010 Budget, came into effect last month and means that basic rate taxpayers are £200 a year better off. And next year's personal allowance increase of £630, will benefit a further 3,560,000 people in the South East by £126 a year, and take a further 32,000 people in the region out of tax.

Winchester & Chandler's Ford MP Steve Brine said: "I welcome the fact that this year alone, thanks to Government action, over 3 million people across the region are paying £200 less income tax this year, and nearly 100,000 of the lowest paid in this region have been taken out of tax altogether.

"We know that times are tough for families across the country, and so it is also important to lift people out of the income tax system and allow them to keep more of their hard-earned money."

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Parliamentary answers from Treasury Minister David Gauke have revealed the number of people in each region who will benefit from the increases in income tax personal allowances this year and next year, and also the number of people who are being taken out of tax altogether.

Mr Gauke said: "The June 2010 Budget announced a £1,000 cash increase in the personal allowance for under 65s to £7,475 in 2011-12 (£820 above the previous Government's plans), with the benefits focused on individuals on low and middle incomes through accompanying changes to the basic rate limit and national insurance upper earnings and profit limits. For basic rate taxpayers aged under 65 this represents a £164 real terms and £200 cash benefit."

"The 2011 Budget announced a £630 cash increase in the personal allowance for under 65s to £8,105 in 2012-13 (£240 above indexation), with an equivalent reduction in the basic rate limit to leave the higher rate threshold unchanged. For taxpayers benefiting from the personal allowance increase this represents a £48 real terms and £126 cash benefit. Those on incomes above £116,210 will pay £48 more in real terms and £126 in cash terms."

(David Gauke, Hansard, 13 May 2011, Col. 1392WA and 1393WA).