What is a personal allowance?

What is personal allowance?

Much to the disappointment of HMRC, most UK taxpayers are entitled to a UK personal allowance. To put it simply, your personal tax allowance is the amount of money you’re allowed to earn which is free from taxation charges.

If you’re struggling to get your head around personal allowances, SimpleTax is here to explain everything you need to know, simply and easily.

How much is personal allowance?

Up to a certain point, everything you earn is untaxable. Yes, you heard us right, for once, everything you earn is just that, yours. But who is entitled to UK personal tax allowance?

Your personal allowance varies, and is dependent on two things:

  1. Your age
  2. Your total annual income

Taking into account your age and your total income for that tax year, there are 3 different categories of personal allowance:

Personal Allowance
Basic£11,000 £11,500
Born between 6th April 1938-48 £11,000£11,500
Born before 6th April 1938£11,000£11,500

Despite there being just three categories, some taxpayers don’t fall into these categories. If your tax affairs are a little more complex (marriage allowance, for example) and none of the three levels above match, for age-related or income-related reasons, then your personal allowance works a little differently. For example:

  • If you’re born before 6th April 1948 – for every £2 of your income above £27,700 in the 2015/16 tax year, your personal allowance decreases by £1.
  • If your income is above £100,000 – for every £2 your income above £100,000 in the 2017/18 tax year, your personal allowance decreases by £1. This charge applies irrespective of age.

How do you get a personal tax allowance?

Getting your personal allowance is simple.  If you file a self-assessment tax return, you will automatically receive your tax-free personal allowance.

If you need to file a tax return, SimpleTax is here to make things unbelievably simple. Forget about long-winded form-filling and unwelcome phone calls with HMRC. Simply enter the details of your income and expenses and we’ll create your tax return for you and submit it online directly to HMRC. Plus for this year only its completely free, register now to save time, stress and money on your tax return.

Access SimpleTax and discover a new free way of filing your return (HMRC approved), know what expenses will help you lower your tax bill and keep all your records online, safe & sound. Ready to file with one click! Free means free. No hidden costs.

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