25/09/08 - This month the Labour Government is giving every basic rate taxpayer under the age of 65 a tax rebate worth £120.

You may have heard this announcement already. At the start of the summer, the Chancellor made clear his intention to give extra help to hard pressed individuals during this current economic downturn.

So beginning this month, you may notice a little extra in your payslip. That's money that we are giving back to you, because we know that people everywhere are feeling the pinch.

So how does it work? Everyone under the age of 65 who pays income tax at the basic rate will have their personal tax-free allowance increased by £600. This means that the total amount you can earn in a year without paying any tax at all has gone up to £6035. And because those £600 of income were taxed at 20%, that's an equivalent of £120 cash back into your bank account. You will get £60 in September, and then £10 per month thereafter until the new tax year.

People aged 65 or over are already benefitting from a personal tax-free allowance that increased in March by at least £1480. And we have raised the earnings threshold for those who pay the higher rate of income tax, to make sure that the benefits only go to those on low and middle incomes. If you are self-employed, you will get your rebate when you complete your tax return next April.

So next time you look at your payslip, you will know that the little extra cash in there is because this government is doing all it can to make life easier during these difficult times. Every Little Helps!