Income Tax allowances, rates and bands
Most people have a Personal Allowance – an annual amount of tax-free income. The rates of Income Tax you pay depend on how much taxable income you have above your allowance.
Personal Allowances 2012 to 2013 tax year
Your eligibility for age-related Personal Allowances will change from the 2013 to 2014 tax year.
Age | Amount |
---|---|
Up to and including 64 | £8,105 |
65 to 74 | £10,500 |
75 and over | £10,660 |
Your Personal Allowance goes down by £1 for every £2 of your income above £25,400 to a minimum Personal Allowance of £8,105 if both the following apply:
- you’re aged 65 and over
- your income is between £25,400 and £100,000
For every £2 your income is above £100,000, your Personal Allowances goes down by £1. This can reduce your Personal Allowance to zero if your income is high enough.
Personal Allowances for 2013 to 2014 onwards
Your eligibility for age-related Personal Allowances will change from the 2013 to 2014 tax year onwards.
Age | Amount for 2013 to 2014 | Amount for 2014 to 2015 |
---|---|---|
Born after 5 April 1948 | £9,440 | £10,000 |
Born between 6 April 1938 and 5 April 1948 | £10,500 | £10,500 |
Born before 6 April 1938 | £10,660 | £10,660 |
You’re born before 6 April 1948
Your Personal Allowance goes down by £1 for every £2 depending on your income and the tax year to a minimum Personal Allowance.
Tax year | Income range | Minimum personal allowance |
---|---|---|
2013 to 2014 | between £26,100 and £100,000 | £9,440 |
2014 to 2015 | between £27,000 to £100,000 | £10,000 |
You may also be able to claim Married Couple’s Allowance.
For every £2 your income is above £100,000, your Personal Allowance goes down by £1. This can reduce your Personal Allowance to zero if your income is high enough.
You’re blind
You may be able to claim Blind Person’s Allowance.
Additional allowance | 2012 to 2013 tax year | 2013 to 2014 tax year | 2014 to 2015 tax year |
---|---|---|---|
Blind Person’s Allowance | £2,100 | £2,160 | £2,230 |
Income Tax rates and bands
You pay tax at these rates on taxable income above your Personal Allowance.
Example
In tax year 2013 to 2014 you earn £35,000 and your Personal Allowance is £9,440. You pay basic rate tax at 20% on £25,560 (£35,000 minus £9,440).
Tax rate | 2012 to 2013 tax year | 2013 to 2014 tax year | 2014 to 2015 tax year |
---|---|---|---|
Basic rate 20% | £0 to £34,370 | £0 to £32,010 | £0 to £31,865 |
Higher rate 40% | £34,371 to £150,000 | £32,011 to £150,000 | £31,866 to £150,000 |
Additional rate 45% (50% for 2012 to 2013) | Over £150,000 | Over £150,000 | Over £150,000 |
Income Tax on savings interest
Savings interest is automatically taxed at 20%. But if you’re on a low income, you may be able to get the interest tax-free or get half of the tax repaid.