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 Allowance Overview

All your allowances ultimately get represented in the form of a personal tax code. You can, therefore, earn the following amounts before the deduction of tax deducted if you are on PAYE. Effectively this means the amount you have as tax-free income before you have a tax liability.

PAYE spreads the amount over a 12 month period to smooth the amount of taxes paid each month rather than paying a lump sum at the end of the financial year.

Income tax allowance calculatorIf you have the standard personal allowance, the tax code is formatted at roughly 10% of the value. A tax-free allowance of £11,500 would provide a tax code of 1150L. Who knows why the code can't just be the full value rather than a percentage, but that's the way it is! All people, no matter how old they are, can claim the personal tax allowance.

All people, no matter how old they are, can claim the personal tax allowance. This includes children, single people, married couples and pensioners.

Just make sure you claim what you are entitled to and check out your tax codes are correct when you receive them in the post as the Inland Revenue has been known to get these codes incorrect.

Current and Historical Tax Allowances

Current Tax Allowances for 2017/18

The current tax-free Personal Allowance stands at £11,500 where the tax rate is 0%.

Tax Band Taxable Income Tax Rate
Personal Allowance Up to £11,500 0%
Basic rate £11,501 to £45,000 20%
Higher rate £45,001 to £150,000 4%
Additional rate £150,001 and over 45%

You also receive a certain amount of dividends free of tax in addition to the above Personal Allowance.

Tax allowances from 2015 to 2019

Description 2015/16 2016/17 2017/18 2018/19
Personal Allowance (PA) £10,600 £11,000 £11,500 £11,850
Basic rate limit £31,785 £32,000 £33,500 £34,500
Minimum Married Couple's Allowance £3,220 £3,220 £3,260 £3,360
Blind Person's Allowance £2,290 £2,290 £2,320 £2,390

Tax allowances from 2011 to 2015

Description 2011/12 2012/13 2013/14 2015/15
Personal Allowance (PA) £7,475 £8,105 £9,440 £10,000
PA for people aged 65-74 (1) £9,940 £10,500 £10,500 £10,500
PA for people aged 75 and over (1) £10,090 £10,660 £n/a £n/a
Married Couple's aged 75+ (1)(2) £7,295 £7,705 £7,915 £8,165
Income limit for age-related allowances £24,000 £25,400 £26,100 £27,000
Minimum Married Couple's Allowance £2,800 £2,960 £3,040 £3,140
Blind Person's Allowance £1,980 £2,100 £2,160 £2,230

Tax allowances from 2007 to 2011

Description 2007/08 2008/09 2009/10 2010/11
Personal Allowance (PA) £5,225 £6,035 £6,475 £6,475
PA for people aged 65-74 (1) £7,550 £9,030 £9,490 £9,490
PA for people aged 75 and over (1) £7,690 £9,180 £9,640 £9,640
Married Couple's aged 75+ (1)(2) £6,365 £6,625 £6,965 £6,965
Income limit for age-related allowances £20,900 £21,800 £22,900 £22,900
Minimum Married Couple's Allowance £2,440 £2,540 £2,670 £2,670
Blind Person's Allowance £1,730 £1,800 £1,890 £1,890

Notes to the above tables:

Car Mileage Allowances

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.

Mileage Allowances by Vehicle 2018/2019

Vehicle Type First 10,000 Miles Subsequent Miles
Cars and vans 45p (40p before 2011 to 2012) 25p
Motorcycles 24p 24p
Bicycles 20p 20p

Source: https://www.gov.uk/expenses-and-benefits-business-travel-mileage/rules-for-tax

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

This value 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 Allowances

Unfortunately, in today's world, a single person gets the same tax allowances as a married person (apart from 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.

Other Allowances

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

Attendance Allowance: You can get an 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. Currently, the higher rate is £83.10 per week and the lower rate £55.65. You claim this allowance from HMRC, and it's paid directly into your bank account rather than added your tax code.

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. The amount gets paid directly into your bank account at an amount of £62.70.

You can find more information on these and other allowances on the .Gov benefits section on their website.