As announced at Budget 2011, the income tax allowance for those aged under 65 will increase by £630 in cash terms to £8,105 in 2012-13. There will be a corresponding £630 cash decrease in the basic rate limit, taking it to £34,370. The higher rate threshold, which equals the sum of the personal allowance and the basic rate limit, will therefore remain unchanged in 2012-13 at £42,475. Legislation will be in Finance Bill 2012.
For 2013-14, the main rates of income tax will be the 20 per cent basic rate, the 40 per cent higher rate and the additional rate will be reduced from 50% to 45%.
For 2013-14 the personal allowance for those aged under 65 will be set at £9,205 and the basic rate limit at £32,245. The Class 1 Upper Earnings Limit and the Class 4 Upper Profits Limit for National Insurance contributions will be aligned with the point at which the higher rate tax becomes payable (£41,450).
From 2013-14, the age-related personal allowances will not be increased and their availability will be restricted to people born on or before:
Legislation will be included in Finance Bill 2012. People born on or after 6 April 1948 will be entitled to the personal allowance of £9,205 for 2013-14.
Legislation will be introduced in Finance Bill 2013 to apply a cap on income tax reliefs claimed by individuals from 6 April 2013. The cap will apply only to reliefs which are currently unlimited. For anyone seeking to claim more than £50,000 in reliefs, a cap will be set at 25 per cent of income (or £50,000, whichever is greater) Draft legislation will be published for consultation later this year.