Debate on £10,000 Personal Allowance

Since the Liberal Democrats announced that they were planning on increasing the personal allowance to £10,000 for all UK taxpayers (excluding high earners), there have been a lot of media reports on how this increase will actually not help low earners but instead will help the higher earners to pay less tax.

Although there are always ways to use tax breaks to your advantage, one should not ignore the fact that this will enable a lot more earners to move out of the income tax bracket completely. There will always be people who are earning more that can take advantage of these tax breaks and perhaps the debate is the that government have not done enough to counteract the benefit for higher earners, but essentially this change will help low earners.

It seems that the press take pleasure in being able to knock any government on their plans and point out any loopholes, even when there is a positive spin to be put on things.

The £10,000 allowance will apply to both members of the household so if you and your partner are earning less than £10,000 a year each then neither of you will be due to pay tax on your earnings once the £10,000 level is reached.

The tax rate for 2012-13 will be £8,105 so there is still a fair way to go to reach the £10,000 threshold in the next few years.

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