Part 1: Principal rates etc. Section 3: Personal Allowance and the National Minimum Wage Background note
This change reflects the government's objective to support and rewards individuals in work. It also provides additional certainty about the level of personal allowances.
	Finance Act 2014 changed the basis of indexation for income tax allowances and limits from the retail prices index (RPI) to the consumer prices index (CPI). Income tax personal allowances, the basic rate limit, the starting rate limit for savings and the adjusted net income limit are currently increased each year by the annual percentage increase in the CPI ("indexation").
	This section changes the indexation of the personal allowance to increase in line with the annual equivalent of 30 hours a week at the national minimum wage relevant rate. This will take place once the personal allowance has reached £12,500.
	The relevant national minimum wage is the hourly rate as prescribed under section 3(2)(b) of the National Minimum Wage Act 1998 in relation to an individual aged 21, or the single hourly rate prescribed under section 1(3) of that Act for an individual aged 21.
	Where this applies, the increased amounts must be set in a Treasury Order before the start of the tax year.
	The Summer Budget announced that the amount of the personal allowance will be set at £11,000 for the 2016/17 tax year and £11,200 for 2017/18.