Workers will be able to earn £11,000 a year before paying tax, Chancellor George Osborne announced today.
The personal allowance will be increased to £10,800 next April, rising by a further £200 for the tax year 2016/17.
As well as raising the tax threshold at the bottom end, the higher rate will also be increased from £42,385 to £43,300 by 2017/18.
You can work out your income tax using this calculator:
Mr Osborne claimed changing the threshold changes were a “down-payment on our commitment to raise the personal allowance to £12,500 and raise the higher rate threshold to £50,000”.
The lower threshold changes actually benefits middle earners more - as if you don’t earn more than £11,000 a year than a further increase does nothing for you.
The threshold which workers begin paying National Insurance was not altered.
Earlier this week, Paul Johnson, director of economic think-tank the Institute for Fiscal Studies, said if the Government really wanted to help low earners he should lift the threshold for National Insurance payments.