Income Tax Allowances
If you are looking at Income Tax Allowances and reviewing or planning your finances, please feel free to contact us. We can discuss your specific circumstances and look at tax efficient ways to legally minimise your income tax and optimise your tax relief.
|Personal Allowance for people born after 5 April 1948 (1) (2)||£11,850||£12,500|
|Income limit for Personal Allowance (2)||£100,000||£100,000|
|Personal Allowance for people born between 6 April 1938 and 5 April 1948|
(1) (2) (3)
|Personal Allowance for people born before 6 April 1938 (1) (2) (3)||£11,850||£12,500|
|Married Couple’s Allowance (born before 6th April 1935 and aged 75|
and over) (3) (4)
|Income limit for the allowances for those born before 6 April 1948||N/A||N/A|
|Income limit for the allowances for those born before 6 April 1938||N/A||N/A|
|Minimum amount of Married Couple’s Allowance||£3,360||£3,450|
|Blind Person’s Allowance||£2,390||£2,450|
|Dividend Allowance (5)||£2,000||£2,000|
|Personal savings allowance for basic rate tax payers (6)||£1,000||£1,000|
|Personal savings allowance for higher rate tax payers (6)||£500||£500|
|Total income limit for Married couples allowance||£28,900||£29,600|
|Transferable marriage allowance (7)||£1,190||£1,250|
|Trading allowance (8)||£1,000||£1,000|
|Property income allowance (9)||£1,000||£1,000|
- From 6th April 2016 onwards, all individuals are entitled to the same personal allowance, regardless of date of birth.
- The Personal Allowance reduces where the income is above £100,000 – by £1 for every £2 of income above the £100,000 limit. This reduction applies irrespective of age.
- These allowances reduce where the income is above the income limit by £1 for every £2 of income above the limit.
- Tax relief for the Married Couple’s Allowance is given at the rate of 10 per cent.
- From 6th April 2016, the new Dividend Allowance results in individuals not paying tax on the first £5,000 of dividend income they receive. From 6th April 2018 the Dividend Allowance will reduce to £2,000.
- From 6th April 2016, the new Personal Savings Allowance results in basic rate tax payers not paying tax on the first £1,000 of savings income they receive. Higher rate tax payers do not pay tax on the first £500 of savings income.
- Introduced from 6 April 2015, 10% of the unused element of a personal allowance can be transferred between spouses, as long as the higher earning spouse does not pay income tax at above basic rate.
- The allowance was introduced from 6 April 2017. Where an individual’s trading income is less than this allowance, full relief will be given so that the income is not charged to tax, unless the individual elects otherwise. If the individual’s trading income is more than this allowance, the individual may elect to deduct this allowance from the trading income instead of the usual method of deducting the actual expenses incurred. This allowance does not apply to partnership trading income.
- The allowance was introduced from 6 April 2017. Where an individual’s property income is less than this allowance, full relief will be given so that the income is not charged to tax, unless the individual elects otherwise. If the individual’s property income is more than this allowance, the individual may elect to deduct this allowance from the property income instead of the usual method of deducting the actual expenses incurred. This allowance does not apply to partnership property income nor income to which rent a room relief is given.
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