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Nearly everyone who lives in the UK is entitled to an Income Tax Personal Allowance. This is the amount of income you can receive each year without having to pay tax on it. Depending on your circumstances, you may also be able to claim certain other allowances.
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The amount of your Personal Allowance depends on:
Total income means everything you receive from all taxable sources. That means you need to include things like pensions and interest on your savings in a building society before the tax has been taken off.
Personal Allowance |
2011-12 tax year |
Income limit |
|---|---|---|
Basic |
£7,475 |
£100,000 |
Age 65-74 |
£9,940 |
£24,000 |
Age 75 and over |
£10,090 |
£24,000 |
If you become 65 or 75 during the year to 5 April 2012, you are entitled to the full allowance for that age group.
Check Income Tax allowances and income limits 2012-13
If your 'adjusted net income' - read more below - is over £24,000 (the income limit for age-related allowances) but not more than £100,000, your age-related Personal Allowance is reduced by half of the amount - £1 for every £2 - you have over the £24,000 limit, until the basic allowance is reached. So if, for example, you're 66 and have income of £24,500 - £500 over the limit - your age-related Personal Allowance is reduced by £250 to £9,690.
Adjusted net income is total income adjusted to take account of certain deductible allowances and reliefs such as trading losses, donations made to charities through Gift Aid and some pension contributions. Find out more about adjusted net income and how it is used for the calculation of the income-related reduction to the Personal Allowance and see worked examples by following the link below.
Personal Allowance and adjusted net income (PDF 30K)
From the tax year 2010-11, if your 'adjusted net income' - read more below - is over £100,000, your Personal Allowance is reduced by half of the amount – £1 for every £2 – you have over that limit. If your income is large enough, your Personal Allowance will be reduced to nil. This £100,000 limit applies irrespective of your age.
Adjusted net income is total income adjusted to take account of certain deductible allowances and reliefs such as trading losses, donations made to charities through Gift Aid and some pension contributions. Find out more about adjusted net income and how it is used for the calculation of the income-related reduction to the Personal Allowance and see worked examples by following the link below.
Personal Allowance and adjusted net income (PDF 30K)
If you already pay tax through your job or pension, or if you complete a Self Assessment tax return, you should receive a Personal Allowance automatically. If for any reason you are not receiving a Personal Allowance and you think you should be, please contact HM Revenue & Customs (HMRC) and they can check your entitlement with you. In order to get the age-related Personal Allowance you need to complete form P161 Pension Coding. Follow the link below to find out when and how you receive this.
Find out why it’s important to complete form P161 Pension Coding
Your tax code will take account of the income-related reduction to the Personal Allowance based on an estimate of your income. HMRC will work out the actual amount of Personal Allowance you are entitled to (if any) when you send in your tax return.
If you want to claim a tax refund because you didn't use your Personal Allowance, or for any other reason, you need to do so within certain time limits. The time you’ve got to make your claim is different depending on whether or not you complete a tax return. Follow the link below to find out how to claim and how long you’ve got to do so.
Tax refunds and claiming back tax you've overpaid
You can't claim the Personal Allowance if you are non-UK domiciled and claim the special 'remittance' basis of tax - whereby you only pay tax on income you bring into the UK. If you think this applies to you, please contact HMRC Charity, Assets and Residency.
Contact HMRC Charity, Assets and Residency
If you're certified blind and are on a local authority register of blind persons, or if you live in Scotland or Northern Ireland and you are unable to perform any work for which eyesight is essential, you can claim Blind Person's Allowance.
If you're married or in a civil partnership and can't use all your allowance, you can give the unused part to your spouse or civil partner. Even if you have no taxable income, it might be still worth claiming Blind Person's Allowance as your spouse or civil partner could benefit from your allowance.
More about Blind Person's Allowance
You need to be a taxpayer to claim this allowance, because it's deducted from your tax bill but it is possible to transfer the allowance to your spouse or civil partner.
You can claim Married Couple's Allowance if:
Married Couple's Allowance - learn more
If you are 65 or over or your income is over £100,000 and you pay tax and give money to a UK charity or Community Amateur Sports Club (CASC) using Gift Aid, it's important to let HMRC know. Your donation may have the effect of increasing the amount of tax-free income and related tax allowances you can receive.
Find out more about the effect donating through Gift Aid has on your allowances by following the link below.
Tax relief when giving to charity through Gift Aid
More about other allowances you may be able to get
Check Income Tax rates and allowances
Do you have to pay tax in retirement?
Financial planning for retirement
Tax and National Insurance when starting, leaving or retiring from work
