It means people will be able to earn £12,570 a year without paying any income tax or National Insurance. The Chancellor said it will benefit 30 million Britons and not just those who are earning below the threshold.
There was some good news to come out of this week’s Spring Statement.
Despite the fact that the Government is pressing ahead with its National Insurance increase of 1.25 percent, it also announced it was raising the threshold at which National Insurance has to be paid.
On Twitter, Mr Sunak said: “From July, people will be able to earn £12,570 a year without paying any income tax or National Insurance.
“”It’s a £6billion personal tax cut for 30 million people in the UK.”
He added: “It’s worth over £330 a year and is the largest increase in a basic rate threshold – ever.”
Commentators welcomed the move which will also see people who earn above the threshold better off.
Laura Suter, the head of personal finance at AJ Bell, said: “The Chancellor went one step further than the leaked plans and extended the National Insurance threshold to £12,570, meaning that anyone earning below this limit will pay no income tax and no National Insurance.
“By bringing in the move in July, rather than immediately, taxpayers won’t get a full year of the benefit.”