The personal allowance is the amount of tax-free income that an individual is entitled to. It can vary according to your age, gender and your circumstances.
As already announced the basic personal allowance for 2015/16 will be £10,600. The Budget on 18th March announced that there will be a further above inflation increase to £10,800 for 2016/17 and £11,000 in 2017/18.
Those aged 75 and over will continue to receive a personal allowance of £10,660 for 2015/16 but by 2016/17 they will receive the basic personal allowance.
The 20% basic rate band is £31,785 for 2015/16 and will be £31,900 for 2016/17. This means that you pay 40% tax if your taxable income exceeds £42,385 for 2015/16 and £42,700 for 2016/17. It is proposed that the higher rate tax threshold will increase to £43,300 for 2017/18.
The 45% top rate continues to apply to taxable income over £150,000 for 2015/16.
By Jo Nockels
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