The 1998 Budget made significant increases in the tax allowances for widowed parents. The existing special tax allowance for widowed parents in the first tax year after the year of bereavement will be increased from £1,500 to £5,000 with effect from April 6th 1998. And the extra allowance will be reduced back to the normal allowance for widowed persons over five years instead of the current three years. ail on Budget Day.

The normal allowance for a widowed person will increase from £3,400 in the current tax year to £3,650 in 1998/99. In addition a widowed person with dependent children qualifies for the single parent allowance, currently £2,400 and to increase to £2,650 for the 1998/99 tax year.

But recently bereaved parents with dependent children qualify for additional special tax allowances. A widowed parent currently gets an additional allowance of £1,500 in the tax year following the year of bereavement, £1,000 in the second year, and £500 in year three. Then the special allowance ends.

Under the new arrangements, which come into effect from April 6th 1998, this special allowance will increase to £5,000 in the first year. This will be followed by £4,000 in year two, £3,000 in year three, £2,000 in year four and £1,000 in year five.