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.

    AgeAmount
    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.

    AgeAmount for 2013 to 2014Amount 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 yearIncome rangeMinimum personal allowance
    2013 to 2014between £26,100 and £100,000£9,440
    2014 to 2015between £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 allowance2012 to 2013 tax year2013 to 2014 tax year2014 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 rate2012 to 2013 tax year2013 to 2014 tax year2014 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 £150,000Over £150,000Over £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.