Autumn Statement 2016 – Workers will now be able to earn £12,500 before having to pay income tax

THE amount a person can earn before income tax kicks in is to rise to £12,500, Chancellor Philip Hammond announced today.

Giving his first budget since taking up the role earlier this year, he said the income tax free personal allowance will go up from £11,000 and the higher rate threshold to £50,000 by the end of this Parliament.

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The personal allowance will then rise automatically in line with inflation during the 2020s.

In his speech Mr Hammond said his Government had raised the allowance from around £6,000 to £11,000 and now to £12,500.

The Government will also raise insurance premium tax from 10 per cent to 12 per cent from June next year Chancellor Philip Hammond said on Wednesday in his first Autumn Statement address to Parliament.

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The move represents a doubling in the tax rate on home and motor insurance premiums within the past two years.

Insurers usually pass tax increases onto policyholders - rather than cop the cost of the rise themselves.

Mr Hammond set out a range of tax hikes, including a crackdown on "unfair" salary sacrifice schemes which are used to reduce levies on employee benefits.

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From April 2017 Mr Hammond said he would align the employee and employer National Insurance thresholds at £157 per week, costing firms up to £7.18 a year for each worker.

Announcing a squeeze on salary sacrifice schemes, Mr Hammond said: "The Government will take action now to reduce the difference between the treatment of cash earnings and benefits.

"The majority of employees pay tax on a cash salary. But some are able to sacrifice salary and pay much lower tax on benefits in kind.

"This is unfair, and so from April 2017 employers and employees who use these schemes will pay the same taxes as everyone else."

Mr Hammond also announced a further crackdown on tax dodges as part of a crackdown aimed at raising around £2 billion over the Autumn Statement forecast period.

Confirming that Whitehall spending squeezes will continue, Mr Hammond said plans set out in 2015 would remain in place.

The £3.5 billion of efficiency savings announced at the Budget are to be delivered in full, but departments which meet their targets would be able to reinvest £1 billion of efficiency savings in priority areas in 2019/20.

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Philip Hammond also used his first Autumn Statement to announce a ban on rip-off fees slapped on rental properties, share out £1.4billion to make it cheaper to rent, raise the National Living Wage by 30p an hour, freeze fuel duty by scrapping a planned 2p-a-litre rise and invest £5billion in infrastructure to boost Brexit Britain.

He may also listen to calls to scrap the controversial Minimum Excise Tax on tobacco which sets a minimum rate of tax on fags and means cheaper brands have to hike their prices, but premium brand cigarettes unaffected.

Boozers also waited with bated breath to see if the Chancellor will freeze the alcohol duty again.

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