Chancellor Philip Hammond announced a tax cut in the form of increases in the personal allowance.

The Income Tax threshold will rise from £11,850 to £12,500 from April 2019, while the threshold at which you people pay a higher rate of income tax will rise from £46,350 to £50,000.

The increase to £12,500 means a basic rate taxpayer will pay £1,205 less tax in 2019-20 than in 2010-11.

Mr Hammond hailed the fulfilment of a key Tory Manifesto pledge a year early as “a tax cut for 32m people.”

The Chancellor said the “era of austerity is coming to an end,” and added: “The hard work of the British people is paying off in hard cash in their pockets.”

Steven Cameron, pensions director at Aegon, said: “Bringing forward the increase in personal tax allowance to £12,500 from April 2019 will be a welcome boost to those struggling to get by, with more low earners being taken out of paying income tax entirely.”

He added: “Increasing the higher rate tax threshold to £50,000 from next April will mean fewer people are higher rate tax payers with some moving to be basic rate tax payers.

“While few will object to this, it does affect pension saving as individuals receive tax relief, or a Government top-up, based on their highest marginal income tax rate of 20%, 40% or 45%.

“For those moving down into the basic rate tax bracket, their Government top-up is halved meaning less may be going into their pension.”