UK Tax Allowances

What You Need To Know About UK Tax Allowances

£11,000 Personal Allowance Announced

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.

Can I Transfer My Personal Allowance?

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

 

Pensioners Could Earn £15,600 Tax Free

iStockbsheetFirstly I need to clarify the title of this article – this doesn’t only apply to pensioners but I wanted to highlight them as the most likely to benefit from this change in the tax rules that will start on 6 April 2015. Everyone can benefit, but it is more likely going to be pensioners that will have higher levels of savings income when compared to earned income (which includes pensions). Continue reading

Personal Allowance 2015/16

Today (3rd December 2014) the Chancellor of the Exchequer, George Osborne, announced that instead of increasing to £10,500 per year, as had been previously announced, the personal allowance would be increasing to £10,600 with effect from April 2015 for the 2015/16 tax year.

Government Considering Restricting Personal Allowance to Residents

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

2014/15 Tax Allowances

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.