Personal allowance

Personal allowance

UK residents receive the first portion of their income free from tax. This is known as their personal allowance. Earnings above the personal allowance are taxable according to how much is earned.

The personal allowance for the tax year 2005-06 for residents under 65 was £4895, and this was increased to £5435 for the tax year 2008-09.

Certain residents are entitled to a larger personal allowance than this. These include the over 65s, the blind, and married couples where at least one person was born before 6 April 1935.

The Chancellor announced in May 2008 that the 2008/09 personal allowance would be increased by £600 from £5435 to £6035. This was done to help low-income customers affected by the abolition of the 10% starting rate of income tax. At the same time the threshold at which someone starts to pay higher rate tax will be reduced by £600, so that higher rate tax payers will not benefit from the change. The change will be implemented in September 2008. It remains to be seen whether or not the enhanced personal allowance will be retained in 2009/10.


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Look at other dictionaries:

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  • personal allowance — The allowance to which every individual resident in the UK is entitled in calculating their taxable income for income tax. The allowance depends on the age of the taxpayer (see age allowance). For 2005–06 the personal allowance for those under 65 …   Accounting dictionary

  • personal allowance — The allowance to which every individual resident in the UK is entitled in calculating their taxable income for income tax The allowance depends on the age of the taxpayer (see age allowance). For 2005 06 the personal allowance for those under 65… …   Big dictionary of business and management

  • personal allowance — UK / US noun [countable] Word forms personal allowance : singular personal allowance plural personal allowances British an amount of money that you can earn each year before you have to start paying tax on your income …   English dictionary

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