Doubling down: Why increasing the personal tax allowance yet again is still poor value for money
Budget week: Why increasing the personal tax allowance (again) would be poor value for money (still)Article
There is now a fair bit of well-informed budget speculation in the air. One of the more likely measures is a further increase in the personal tax allowance (PTA). Both Coalition parties are committed to increasing the PTA in the next parliament, and cutting taxes before an election is always a popular move among politicians. So a mooted further rise in the PTA from the currently planned hike to £10,600 in April to £11,000 seems like an eminently plausible feature of this week's budget announcement.
Using the IPPR tax-benefit model, we estimate that this would cost £2.1 billion a year. Assuming that the chancellor also proceeds with increasing the higher-rate tax threshold by 1 per cent as planned, the distributional impact across families (rather than individual taxpayers) looks like this:

Related items

Taxing choices: Taking the public’s temperature ahead of the budget
The stakes for a government are rarely higher than at a budget. Every chancellor has dealt with this differently. Ken Clarke would draft his budget speech with cigars and whisky, Gordon Brown pored over every word in what officials called…
Great expectations: Rejuvenating the national debate in Scotland
Fresh IPPR Scotland polling shows that politicians must raise their game if next year’s election is a to be serious debate about the challenges facing Scotland and potential solutions.
Unfinished business: Redressing inequality in British policy and Black lives
As conversations about race and equality continue to evolve, Black History Month remains a powerful invitation to pause, reflect, and recommit to progress.