Personal Allowances Explained


What is the Personal Allowance

It is an amount of income that you can earn which is deemed non-taxable by the UK Government. If your income surpasses this amount, you would pay tax on the excess amount. There are certain parameters which determine what your personal allowance would be such as your age, if you are married and your salary.

For example, you earn £15000 in the tax year 15/16. (ie between 6 April 2015 and 5 April 2016) The Basic Personal Allowance specified by HMRC for this tax year is £10600. So you would not be taxed on the first £10600 of the £15000 that you earned. So your tax is effectively calculated on £4400 (£15000-£10600). Effectively saving you £2120 (ie. 20% X £10600) 


Eligibility to claim a Personal Allowance

You are eligible to claim a personal allowance if

  • you are a British Passport holder
  • you’re a citizen of country within the European Economic Area
  • you’ve worked for the UK government at any time during that tax year
  • there is a double taxation agreement between the country you are in and the UK
Published: October 11, 2015 Updated: October 11, 2015