The income tax threshold will increase by by £1,000 in April, the Chancellor said today in his emergency Budget.
George Osborne said this will give 23 million people up to an extra £170 per year and take 880,000 people out of the tax system altogether.
The increase will see the personal allowance raised to £7,475.
He also said the higher rate income tax threshold will be frozen.
The £1,000 increase is part of the coalition's plan to eventually raise the allowance to £10,000 - a key Liberal Democrat pledge in the run up to the election.
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch
To drive progress