PERSONAL tax underwent another shake-up which will see anyone earning less than £11,000 a year taken out of income tax altogether from April 2017.

Although heavily trailed in advance of the Budget, this is slightly later than expected. It will be preceded in 2016 by a £200 hike in the personal tax allowance from £10,600 to £10,800.

Chancellor George Osborne says this will cut tax for 27 million people and take almost four million people out of paying income tax altogether.

There were also minor changes in National Insurance to boost employment among young people and apprentices, but no sign of a rumoured increase in the NI threshold to reduce contributions for vast swathes of the workforce.

John McAuslin, tax director at Johnston Carmichael accountants, said: "[The personal tax threshold] will go to £10,800 by 2016 and £11,000 by 2017, so possibly a couple of years behind what we were expecting.

"Having said that, the cost to the Exchequer for doing that with such a small increase is about £1 billion in 16/17 and £1.5bn in 17/18. So when the Chancellor is trying to balance his books, he's wanting to give something away but not too much to just one particular source.

"He didn't increase the threshold for national insurance across the board, but there were some targeted benefits for employing under-21s and for apprenticeships.

"If you're under-21 or you're on one of these apprenticeships then you don't pay any National Insurance at all. For everybody else, the point at which you start paying NI is at a much lower level than the threshold for income tax - it's just under £8000

"Overall, I think the changes are good for people who are working and earning money. The overall number of people taken out of tax has increased, which is good, and those who shouldn't be on the higher rate tax band has increased as well, so overall I think it's giving more people more money in their hand and that was the intention for those people who are working."

Not everyone welcomed the cut however, with critics arguing that there were better ways to pull lower earners out of poverty.

David Kilshaw, head of private client tax at the EY group, an official advisor of Glasgow 2014, said the rise in personal tax allowance was great for headlines but not so great for lower paid.

He said: "An increase in the threshold at which National Insurance is paid would have been more helpful to the lower paid than an increase to the personal allowance.

'The Chancellor clearly wants to boost people's pre-election pay packets."

Fiona Weir, chief executive of single parent campaign group Gingerbread, said increasing the personal tax allowance will be of little help to those struggling on the lowest incomes.

"For people already earning too little to pay tax it makes no difference, while those on universal credit will see any increase in take home pay offset through reductions to their benefits - losing 65p for every extra pound they get in take home pay," she said.

Critics also noted that while that lower threshold has been on the up - from £6,475 in 2010 - the 40 per cent tax band for higher earners has yet to return to its 2010 level of £43,875, disadvantaging the "squeezed middle".

From 2017, the starting rung for the 40p tax band will increase to £43,300. It currently stands at £41,865 and is due to rise to £42,385 on April 6, with a further hike in April 2016 to £42,700 in 2016/17.

Mr McAuslin said: "The £43,300 threshold will come in in 17/18. It's going to be above inflation but they've cut it back during the years, so we're not back to where we were in 2010 yet.

"The Chancellor wants to get to a position where that'll get up to £50,000 plus a £12,500 personal allowance, so this is the starting point of them increasing the middle incomes.

"There will be a lot of people saying they've been squeezed - there was an extra 1.5 million people brought in to the higher rate when it was never meant to cover that amount of people - and the middle income earners are still being squeezed."

Jonathan Isaby, chief executive of the TaxPayers' Alliance, said: "The Chancellor delivered some good news on income tax, with tax cuts for the lowest paid and long-overdue relief for ordinary people being clobbered by the higher rate.

"Leaving more of people's money in their own pockets is the best way to promote economic growth and long-term prosperity, and it's morally right too."

Charlotte Barbour, head of taxation at the Institute of Chartered Accountants Scotland (ICAS), said: "We agree that what the country's tax system needs is longer term planning and real commitment to simplification. Setting out staged increases in personal allowances is one way to do this, and it will put money direct into the pockets of many taxpayers."