Category Archives: Personal Allowance News

Personal Allowance News, Tax Allowances

UK Personal Allowance 2017/18

6 Comments

*Update* – this was increased in the 2016 Budget to £11,500

The UK personal allowance is the amount that you are allowed to earn before you are subject to tax. You can also add on to this the personal savings allowance and the dividend allowance that could be applicable to some of your earnings.

So if you are wondering what is the UK personal allowance for the tax year 2017/18 then the figure you are looking for is £11,200.

This is an increase of £200 on the personal allowance from 2016/17 – equivalent to 1.8%.

There were previously other lower figures announced for 2017/18 (which you can still find reference to on the HMRC website which can make it confusing), but when the personal allowance was increased to £11,000 for 2016/17 this was a jump higher than had previously been announced and so figures beyond 2017 also needed to be amended.

Of course there is a small chance that this could be changed in the 2016 budget but it looks unlikely at this stage.

 

Personal Allowance News, Savings, Tax Allowances

Personal Savings Allowance 2016/17

Leave a comment

With effect from April 2016 the government have introduced a personal savings allowance that means that the majority of people will not have to pay tax on their interest from savings.

This is a new allowance which is in addition to the £5,000 allowance for low earners that was introduced in 2015.

For those whose earnings are in the 20% tax bracket, there is a £1,000 savings interest allowance – so you can earn £1,000 in interest on your savings without paying any tax on that interest.

In order to have savings where some part of the interest is taxable it is likely that you would need to have over £50,000 in savings – and this is worked out on a 2% interest rate which may not always be achieved.

For those whose earnings put them in the higher rate tax bracket (i.e. those who earn over £43,000 but below £150,000) there is a reduced personal savings allowance of £500.

Anyone in the additional rate tax bracket will not be entitled to any personal savings allowance.

Because these new rules mean that 95% of people will no longer pay tax on their savings, the tax will no longer be deducted at source from savings interest as it has been in previous years. Therefore there is no need to notify your bank or building society to ask them not to take tax off your interest.

 

Paying Tax, Personal Allowance News

Do Children Get a Personal Allowance?

Leave a comment

If you are wondering do children get a personal allowance then the short answer is yes, they do. Everyone in the UK is entitled to a personal allowance, letting them earn a certain amount of their income tax free.

The amount of the personal allowance for 2015/16 is £10,600 per annum for each person and the personal allowance for 2016/17 will increase to £11,000 for the tax year.

Maybe babies don't earn much but they are still entitled to the personal allowance...
Maybe babies don’t earn much but they are still entitled to the personal allowance…

Although it is unlikely that many children will earn as much as the personal allowance, there are obviously exceptions to the rule so the personal allowance can be useful to everyone. Only certain types of income are subject to tax so watch out for those that are not taxed anyway such as income from certain National Savings accounts and Premium Bonds and income from Junior ISAs.

Unlike with married couples it is not possible to transfer any of the child’s personal allowance to the parent though.

Another question related to this subject is – do children have to pay tax? – and the answer to this one as well is yes. If they have earnings that exceed the personal allowance then yes they have to pay tax on those earnings just like anyone else might do. They would even be subject to higher rate tax if that was appropriate to their circumstances.

 

Personal Allowance News, Tax Allowances

Personal Allowances for 2017

Leave a comment

The personal allowances for 2017 have been announced and have been increased for all tranches of earnings from the allowance for zero tax to the 40% earnings threshold. This should mean a lower tax bill for most people although obviously it depends on whether earnings have increased in a similar manner.

The personal allowances for 2017 are as follows:

Personal allowance at zero rate tax – £11,200

Basic rate tax allowance – £32,400

Therefore the Higher rate tax threshold increases to – £43,600

The aim is to raise the higher rate tax threshold to £50,000 by the end of parliament and the personal allowance to £12,500 at the same point.

By 2017 we are referring to the tax year that runs from 6 April 2017 to 5 April 2018.

The basic rate of tax for 2017/18 is currently set at 20% (at time of publishing August 2015) and the higher rate tax is 40%. In addition there is an additional tax rate of 45% for earnings over £150,000.

 

Personal Allowance News

Personal Allowance 2016/17

Leave a comment

In the first sole Conservative budget in 19 years, George Osborne has pledged to accelerate the increase in the personal allowance for 2016/17 from the previously announced figure of £10,800 to the new figure of £11,000.

The personal allowance 2016/17 is £11,000

The current personal allowance of £10,600 was due to increase to £10,800 in April 2016 but will now increase to £11,000 which was the proposed figure for 2017/18.

This all leads up to the plan for a personal allowance figure of £12,500 that the Conservatives plan to be in place by 2020. The government has continued to publicise it’s plan to increase the personal allowance so that those on lower wages do not have to pay any tax. However, of course, any increase in the personal allowance will also benefit those higher earners as they will have enough earnings to cover it. The only people who will not benefit in the increase in the personal allowance are those whose earnings are too high to be entitled to a personal allowance.

Each increase of £200 in the personal allowance should save people earning less than £100k pa, £40 a year in tax, or £3.33 a month, not a massive amount but every little helps if you are earning on the lower end of the scale.

Personal Allowance News, Tax Allowances, UK Budget

£11,000 Personal Allowance Announced

Leave a comment

In the Budget today George Osborne announced that the personal allowance would be increased to £11,000 a year with effect from the 2017/18 tax year. This will be preceded by another increase in the personal allowance to £10,800 for the tax year 2016/17.

There have been a number of increases in the personal allowance over the last few years and these increases come after the recent increase in the personal allowance for the year 2015/16 to £10,600.

Paying Tax, Personal Allowance News

Can I Transfer My Personal Allowance?

11 Comments

The long question is: Can I transfer my personal allowance to my husband/wife/civil partner if I am not using it?

Well from April 2015 the answer is yes, you can transfer part of it. So, if you are earning less than the personal allowance in 2015/16 and your partner (i.e. wife/husband/civil partner) has earnings that are not taxed at any higher than the 20% rate, then you can transfer part of your personal allowance to them – currently the amount that you can transfer is £1,060.

This would mean that they would have a personal allowance of £11,660 instead of £10,600, reducing their tax bill by £212 for the year and your personal allowance would be £9,540. Therefore if you earn less than £9,540 a year then it is a no-brainer to transfer this allowance over to your partner.

However, your partner must not be in the higher rate tax bracket for the transfer to be allowed.

Also, HMRC have not yet declared how this transfer will take place although they have indicated that it will be via an online submission.

This may help families in particular where there is the traditional model of one parent staying at home to look after the children and the other working.

The standard level of income that you would need to earn to fall into the 40% tax bracket is £42,385. Of course this may be different in certain circumstances so you should take advice for your personal situation. So it is possible if you earn below this and your partner earns less than £9,540 then it is worthwhile for you to transfer over the portion of the personal allowance. OK so a gain of £212 a year is not massive but it’s certainly worth having.

Edited to add on 20 Feb 2015: you can register your interest in transferring part of your allowance here: https://www.gov.uk/marriage-allowance

 

Personal Allowance News

Government Considering Restricting Personal Allowance to Residents

Leave a comment

The Government is currently considering restricting the personal allowance only to residents of the UK. This means that anyone who is classed as a non-resident may not be entitled to the £10,000 per annum personal allowance that is given to any individual before they are required to pay tax (with the exception of high earners who may not get the personal allowance). Continue reading Government Considering Restricting Personal Allowance to Residents →

Personal Allowance News, Tax Allowances

2014/15 Tax Allowances

Leave a comment

The main tax allowances for 2014/15 have increased to the following amounts:

Individual Personal Tax Allowance: £10,000

Individual Personal Tax Allowance for those who were born between 6 April 1938 and 5 April 1948: £10,500

Individual Personal Tax Allowance for those who were born before 6 April 1938: £10,660

So the personal tax allowances for all ages are starting to come into line and the idea is to increase the general personal allowance to £10,500 so there may not be any age advantage at some point in the future.