Emergency Budget: Personal tax allowance to be raised by £1,000

Personal tax allowance is to be raised by £1,000 to £7,475, the emergency budget 2010 has unveiled.

This will mean that almost 900,000 of the lowest paid will no longer have to pay income tax and that 23 million basic taxpayers will save up to £170 a year.

In the long term, the government is to raise the threshold at which income tax starts to £10,000.

The National Insurance is also set to be increased, with a one per cent rise in employee contributions for lower earners from April 2011.

Osborne announced that any company set up outside London, the south east or the eastern region will be given a three year national insurance relief.

Firms will be also be exempt for up to to a maximum of £5,000 of employee national insurancepayment for each of their first ten employees.