The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
The personal allowance is a deduction against net income that is available to all UK resident individuals (and some non-residents, see below). The basic personal allowance for 2019/20 is £12,500 (£11,850 for 2018/19).
Where an individual’s net income exceeds £100,000, his personal allowance is reduced by £1 for every £2 of income above £100,000.
A husband and wife / civil partners are treated as separate persons and so each is entitled to a personal allowance to set against their own personal income. Where one spouse / civil partner is working and the other is not, both personal allowances can be utilised by the transfer of income-producing assets to the non-worker. See the Utilising allowances and lower rate bands guidance note for more details.
From 6 April 2015, an individual is able to ‘transfer’ 10% of his personal allowance (£1,250 for 2019/20; £1,190 for 2018/19) to his spouse / civil partner, who receives a tax reduction of 20% of this amount. In order to make the transfer, both parties must not be higher rate or additional rate taxpayers. See the Transferable tax allowance guidance note.
The personal allowance is a deduction from net income (ie a step 3 deduction, see the Proforma income tax calculation guidance note).
It is generally true that if the individual has insufficient income in the tax year to use the allowance, it is lost; it is not possible to carry forward the unused proportion. However, from 2015/16, it may be possible to transfer 10% of the unused allowance to the spouse / civil partner, see the Transferable tax allowance guidance note.
To be entitled to a personal allowance, the individual must fall into one of the residence categories below:
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