Tax Allowances

Every person in the UK has some tax allowances that they can use to set off against any tax liabilities they may incur during the financial year.

The rates provided cover single persons tax allowance, gifts, pensioners, married couples and blind persons who get a different tax code.

Table of contents

Income Tax allowances

The following allowances are in the form of a tax code whereby you can earn the following amount before tax is deducted if you are on PAYE or effectively what you can have as tax free income before you are charged on your tax return. PAYE of course spreads the amount over a 12 month period to smooth the amount of taxes paid each month.

income tax allowances for allIf you have the standard personal allowance the tax code is formatted at roughly 10% of the value so the tax free allowance of £6,475 would be a tax code of 647L - why it can't simply be the full value who knows! All people no matter how old can all claim the personal tax allowance so that includes children, single people, married couples and pensioners. Just make sure you claim what you are entitled to and also check out your tax codes are correct as the Inland Revenue has been know to get these codes incorrect.

Income Tax allowances 2007-08 2008-09 2009-10 2010-11 2011-12
Personal Allowance £5,225 £6,035 £6,475 £6,475 £7,475
Personal Allowance for people aged 65-74 (1) £7,550 £9,030 £9,490 £9,490 £9,940
Personal Allowance for people aged 75 and over (1) £7,690 £9,180 £9,640 £9,640 £10,090
Married Couple's Allowance (born before 6th April 1935 but aged under 75) (1)(2)(3) £6,285 £6,535 na na na
Married Couple's Allowance - aged 75 and over (1) (2) £6,365 £6,625 £6,965 £6,965 £7,295
Income limit for age-related allowances £20,900 £21,800 £22,900 £22,900 £24,000
Minimum amount of Married Couple's Allowance £2,440 £2,540 £2,670 £2,670 £2,800
Blind Person's Allowance £1,730 £1,800 £1,890 £1,890 £1,980

Notes to the above table:

Note 1: These allowances reduce where the income is above the income limit - by £1 for every £2 of income above the limit. However they will never be less than the basic Personal Allowance or minimum amount of Married Couple's Allowance.

Note 2: Tax relief for the Married Couple's allowance is given at the rate of 10 per cent.

Note 3: In the 2009-10 tax year all Married Couple's Allowance claimants in this category will become 75 at some point during the year and will therefore be entitled to the higher amount of the allowance - for those aged 75 and over.

The personal allowance is reduced by 50% of income over £100,000

Up to date tax allowances can be found on the HMRC website here

Car Tax Allowance

The inland revenue has a car tax allowance if you use your private vehicle for driving on business where you can claim a fixed amount back per mile no matter what size of the engine of your vehicle.

From 2002/03 First 10,000 Business Miles within the tax year Each subsequent mile
Cars and vans 40p 25p
Motorcycles 24p 24p
Bicycles 20p 20p

From April 6th 2011 the mileage allowance for the first 10,000 mile is increased to 45p

This is the maximum amount that can be offset against tax although your company can pay you more or less than the values mentioned above.

Single Persons and Married Persons Tax Allowance

Unfortunately in today's world a single person gets the same tax allowances as a married person (apart from an age related married persons allowance shown in the table above). So whether you are single, married or in a civil partnership we all get the same basic personal allowance of £6,475 from April 2009.

Other Allowances

There are other tax allowances that you can claim in certain circumstances and these are listed below:

Attendance Allowance - You can get Attendance Allowance if you're aged 65 or over and need help with personal care because of an illness or disability. There are two rates depending on how the disability affects you. For 2008/9 the higher rate is £70.35 per week and the lower rate £47.10. This allowance is not added to your tax code but you claim it and it's paid directly into your bank account.

Carer's Allowance - You can receive Carer's Allowance if you're aged 16 or over and spend at least 35 hours a week caring for someone and they should also be receiving at least one of the following: Attendance Allowance, Disability Living Allowance or Constant Attendance Allowance. This is paid directly into your bank account at an amount of £53.10

More information on these allowances can be found here