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Commonly Asked Question : What is personal tax allowance?

Income tax rates and Personal allowances

 


Current rates and allowances

How much income tax you pay in each tax year depends on:

- How much of your income is above your personal allowance

- How much of your income falls within each tax band


Some income is tax free.


The current tax year is from 6 April 2021 to 5 April 2022


Your tax-free Personal Allowance

The standard personal allowance is £12,570, which is the amount of income you do not have to pay tax on.


Your personal allowance may be bigger if you claim marriage allowance or blind person's allowance. It's smaller if your income is over £100,000.


Income tax rates and bands

Tax rates you pay in each band is different if you have a standard personal allowance of £12,570.


Band

Taxable income

Tax rate

Personal Allowance

Up to £12,570

0%

Basic rate

£12,571 to £50,270

20%

Higher rate

£50,271 to £150,000

40%

Additional rate

over £150,000

45%

You can also see the rates and bands without personal allowance at : Income Tax rates and allowances for current and past years - GOV.UK (www.gov.uk). You do not get personal allowance on taxable income over £125,140.


If you're employed or get a pension

Check your income tax to see your personal allowance and tax code, how much tax you've paid in the current tax year and how much you're likely to pay for the rest of the year.


Other allowances

You have tax free allowances for :

- Savings interest

- dividends, if you own shares in a company


You may also have tax-free allowances for:

- your first £1,000 of income from self-employment- 'Trading allowance'

- your first £1,000 of income from property you rent (apart from Rent a Room Scheme)


You pay tax on any interest, dividends or income over your allowances.


Paying less income tax - You may be able to claim income tax relief if you are eligible for them.


Married or civil partnership - you may be able to claim marriage allowance to reduce your partners tax if your income is less than the standard personal allowance.


If you do not claim marriage allowance and you or your partner were born before 6 April 1935, you may be able to claim Married Couple's allowance.


 

Gov.uk, 2021. Income Tax rates and Personal Allowances. London: Gov.uk, p.1.

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