EY Budget reaction: Increased personal allowances unlikely to help the poorest taxpayers

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EY Budget reaction: Patrick Stevens, a tax partner at EY comments on the increases to personal allowances

“As expected, the Chancellor today announced that the personal allowance will increase to £9,205 with effect from April 2013.  This is good news for many on low and middle incomes, and is predicted to remove 840,000 people from the tax system altogether.  The increase is nevertheless unlikely to help the poorest taxpayers, many of whom will lose in means tested benefits what they gain in tax terms.  Unlike in previous budgets, higher rate tax payers will benefit from the increase, but to a lesser extent, as the level at which the 40% tax rate takes effect will also be reduced.”