Part 1: Principal rates etc. Section 5: Personal allowance from 2016 Background note
The government has an objective to raise the personal allowance to £12,500 by the end of this Parliament.
	Finance Act 2014 provides that from 2015-16 there are two personal allowances available by reference to an individual’s date of birth: one for those born after 5 April 1938 and one for those born before 6 April 1938.
	The amount of the personal allowance for those born before 6 April 1938 is fixed at £10,660. Finance Act 2015 increased the personal allowance to £10,800 for 2016-17, so it removed the personal allowance for those born before 6 April 1938. The effect is that from 2016-17 everyone, regardless of their date of birth, is entitled to the same personal allowance.
	Section 3 changes the indexation of the personal allowance from CPI to increase in line with the annual equivalent of 30 hours a week at the national minimum wage at the relevant rate. This change will take place once the personal allowance has reached £12,500.