Budget: Nearly 1m freed from income tax

Budget at a glance

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Chancellor George Osborne is increasing the threshold at which income tax kicks in by 1,000 to 7,475 from April next year.

The move will save the UK's 23 million basic rate taxpayers 170 a year, while it will mean around 880,000 people will no longer have to pay the tax at all.

However, higher rate taxpayers will not benefit from the move, and the threshold at which the 40% rate of income tax starts will be frozen until 2013/14.

The increase in the personal allowance is the first step towards fulfilling a coalition pledge to raise the threshold at which income tax starts to 10,000 over the longer term.

It also aims to offset the impact of a 1% rise in National Insurance contributions from April next year for lower earners.