In his Autumn Statement speech today, George Osborne said the increase, which will take personal tax allowance to £9,440, means 2.2 million people will be taken out of tax.
Osborne said: "Personal tax allowance will rise to £235 more than planned in April next year. this means it will go up by £1,335 in total next year and we are now within touching distance of the £10,000 tax threshold mark."
Alex Henderson, tax partner at PWC said: "This will be of great benefit to low-paid workers and help reducing that tax burden.
"Good news for low earners but this could mean alowering of the bracket for the highest rate of tax and again it will be the middle earners effected again."
Henderson added: "We have to remember anything this chancellor does is not without costs to someone."
Ministers lifted the tax threshold by £1,000 to £7,475 in April 2011 and then pledged to ultimately raise the threshold to £10,000 by 2015.
Daniel Hibbert, Partner at Mercer and Public Sector Pay, added: ""The Pay Review Bodies have largely rejected the Government’s proposals for regional pay, and the Government has accepted that regional pay will be very difficult to implement on the basis it had previously envisaged. Going forward we can expect to see more flexibility in the operation of national pay frameworks, but without the more radical “top down” changes that the government had once hoped to impose.
"The proposal to give more flexibility to schools to link teachers’ pay to performance could herald an interesting change in direction in the operation of public sector pay. It will interesting to see if schools themselves have the appetite to take advantage of these new flexibilities: Free Schools already have the power to set their own terms and conditions and it is notable that Independent Schools do not normally link pay to performance, even though they have the freedom to do this."
