UK tax allowance
Personal And Other Tax Allowances in UK for AY 2008-09:
(A) Personal Tax Allowances:
Every legal resident of UK qualify for income tax personal allowance.This is the amount of income one can receive without having to pay tax on it.Personal allowance depends on:
1) Age of the person as on 5th April 2008 : There are mainly three age groups for individual and married couple's personal allowances. If someone becomes 65 or 75 during the year to 5 April 2009, he/she is the allowance for that age group 65-74 and above 75 respectively for 2008-09.
2) Total income of the person : There is an established income limit for age related allowances.There is an income limit established for persons of age 65 years and above. This limit is increased by £900 from £20,900 to £21,800. If someone's income is above the "income limit", the age related allowance reduces by half of the amount (£1 for every £2) his/her income over that limit, until the basic rate allowance is reached. But one can always get the basic allowance, whatever the level of his/her income is.
So if, for example, someone's 66 and have an income of £22,500 (£700 over the limit) his age-related allowance would reduce by £350 to £8,680 (£9,030-£350) for year 2008-09.
There are mainly three groups of Personal Allowances:
1) Personal allowances(Basic Rate): Personal allowance for 2007-2008 was £5225 which is increased by £210 for the year 2008-2009 to £5435.
2) Personal allowance (age 65-74): This allowance was £7,550 for 2007-08 but increased by £1,480 to £9,030 for 2008-09.
3) Personal allowance (age above 75): This allowance is increased by £ 1,490 from £7,690 (2007-08) to £ 9,030 (2008-09).
(B) Married Couple Allowance:
One can also claim this allowance if:
1) He/she is married or in a civil partnership,
2) He/she is a taxpayer,
3) He/she or his/her spouse/ civil partner were born before 6 April 1935.
A minimum and maximum MCA allowance is set each tax year and 10 per cent of the amount someone qualify for is deducted from his/her tax bill.
There are mainly 3 types of Married Couple's Allowances:
1) Married Couple's Allowances (Minimum Amount): The allowance was £2,440 for 2007-08 and increased by £100 to £2,540 for 2008-09.
2) Married Couple's Allowances (Age less than 75 and born before 6th April 1935): This allowance was £6,285 (2007-08) and increased by £250 to £6,535 (2008-09).
3) Married Couple's Allowances (Age above 75): The allowance was £6,365 (2007-08) which is increased by £260 to £6,625 (2008-09).
(D) Blind persons Allowance:
If someone is registered blind, or are unable to perform any work for which eyesight is essential, he/she can claim blind person's allowance. Again, this is an amount of money he/she can get without paying tax.If he/she is married or in a civil partnership and can't use all allowance, he/she can give the unused part to his/her spouse or civil partner. The allowance was £1,730 (2007-08) and increased by £70 to £1,800 (2008-09). There are no age or income restrictions.
(E)Pension Scheme Allowances:
Apart from the other allowances mentioned earlier, Pension Scheme Allowances is also included in personal tax allowances. There are two groups of this allowance:
1) Pension Scheme Allowance (Annual Allowance): The allowance is increased by£10,000 from £225,000 to£235,000.
2) Pension Scheme Allowance (Life Time Allowance): This allowance is increased by ã50,000 from £1,600,000 (2007-08) to 1,650,000 (2008-09).
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