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.

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