From midnight on Sunday morning, 676,000 people in Northern Ireland will be paying less tax with 83,000 taken out of income tax altogether, thanks to a series of increases in the tax-free personal allowance to £10,000.
The latest of these changes comes into effect over the weekend and means an extra 8,000 hard-working people from Northern Ireland will no longer pay any income tax at all.
The vast majority of working people in Northern Ireland have benefited from the personal allowance increases over the past 4 years. For the next year, that means an income tax reduction of £705 for the typical basic rate taxpayer. Over the lifetime of this Parliament, the cumulative income tax cut for the typical taxpayer will be £1,824.
Businesses will also benefit from a new £2,000 employment allowance against employer National Insurance costs, which comes into effect overnight on Sunday. This is in addition to the 2 percentage point reduction in corporation tax that took effect from earlier this week.
The Prime Minister David Cameron said:
A key part of this government’s long-term economic plan is to cut taxes so that people can keep more of the money they earn and feel more financially secure. From this weekend, you will not pay a single penny of income tax on everything you earn up to £10,000.
Nearly every single worker across the country will get a tax cut and over 3 million will pay no income tax at all. It says to the hardworking people of this country: we are on your side - and it’s one of the proudest things I have done in government.
Secretary of State for Northern Ireland, Theresa Villiers said:
By helping out with the cost of living and supporting small businesses and enterprise, the government is demonstrating its commitment to building a stronger and more stable economy and securing a better future for hard-working families in Northern Ireland and across the UK. We are only able to do this because our long term economic plan is working.
This weekend’s increase in the tax-free personal allowance for income tax will mean everyone in Northern Ireland keeps more of the money they earn, more people here will pay no income tax at all, and many of those who work flexibly and part-time will benefit.
These tax changes will directly help thousands women in Northern Ireland who account for more than half of the 83,000 people who will no longer have to pay income tax. Even more hard-working families will be taken out of income tax next year when the personal allowance is increased again to £10,500.
Many small businesses have had such a tough time over recent years and they will have their tax bill cut with a new £2,000 allowance for employer National Insurance encouraging them to create jobs and employ more people.
The changes coming into effect on Sunday 6 April include:
- Someone working full-time on the October 2014 minimum wage (£6.50/h at 35hrs a week) will pay over 50% less income tax in 2014-15 than someone on the national minimum wage in 2010
- Someone working for just under 30 hours a week on the October 2014 minimum wage will not pay any income tax at all
Nationally, government measures are cutting tax for over 26 million people. This includes taking over 3 million out of paying any income tax at all.
The cumulative amount in income tax cuts over this parliament (£1,824) is arrived at by adding up the savings for the typical taxpayer from tax years 2010-11 up to and including 2014-15.
Including the rise to £10,500 in 15/16, this takes it up to £2,629 – a saving that will be realised by March 2016.