Many taxpayers will be hundreds of pounds a year better off as new Treasury Minister Chris Thomas used his first Budget speech to confirm the largest increase in the personal tax allowance in recent years.
The widely anticipated measure will see the personal tax allowance increase from the current £14,750 to £17,000 for individuals, and to £34,000 for jointly assessed couples, from April.
This will take a further 3,600 people out of the tax net altogether.
With the band for paying the 10% lower rate of income tax remaining at £6,500, the change to the allowance will mean people will only start paying 21% high rate tax at income above £23,500.
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The measure will cost the Exchequer an extra £24m to fund - money that will found by raiding the reserves once again.
A single person with no children earning between £25,000 and £45,000 will be £518 better off a year, while a working couple with no children on a salary of between £55,000 and £85,000 will be £1,036 better off.
A single parent with two children earning £35,000 will get £803 more in their pocket while a couple while working couple with two children earning £45,000 to £55,000 willb e £1,106 better off.
Mr Thomas said the change to the personal allowance ‘will increase most taxpayers’ take-home pay, taking about £3,600 people out of the tax nets and is aimed to boost disposable income and the local economy.
He said the increase is triple the £750 proposed until the Budget revisions took place a few weeks ago, and that proposed £750 rise was already triple the only other increases since 2021.
A worker covering up to 35 hours a week on the new minimum wage rate, recently agreed by Tynwald and coming into effect in April - will earn a maximum of £23,400 a year and so will not fall within the 21% high tax bracket.
Tynwald’s decision last month to reduce the increase in the minimum wage from a proposed 9.9% to 5% was the culmination of a dramatic week in Manx politics which saw the sacking of two members of the cabinet, including Treasury Minister Dr Alex Allinson.
Chief Minister pledged a new direction for a government in the final months before the general election.
The personal allowance will continue to be reduced by £1 for every £2 that a person's total income is above £100,000. This means if a person's total income is £134,000 or above their personal allowance will be zero.
The very wealthiest island residents will continue to have the option to make a Tax Cap election for a five or ten year period. From April 6, the cap remains at £220,000 and £440,000 for a jointly assessed couple.