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:
- Your age
- 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 | 2016-17 | 2017-18 |
|---|---|---|
| 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.
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