Income Tax

Income Tax Personal Allowance (PA) for tax years 2015-2016 & 2016-17

An Income Tax Personal Allowance is the amount of income you can earn each tax year without having to pay any tax on it. Nearly, everyone in the UK is entitled to an Income Tax Personal Allowance.

 

The amount of your Personal Allowance depends on your:

  • Age
  • Income from all taxable sources
  • Martial status
Type of Income Tax Personal Allowance (PA) 2015-2016 2016-2017 Income limit for PA
Personal allowance (aged under 65) £10.600 £11.000 £100,000¹
Personal allowance (aged 65 – 74) £10.600 £11.000 £27,700
Personal allowance (aged 75 and over) £10.600 £11.000 £27,700
Married couple’s allowance for people born before 6 April 1935 £8.355 £8.355
Married couple’s allowance – aged 75 and over £8.355 £8.355
Minimum amount of married couple’s allowance £3.220 £3.220
Blind person’s allowance £2.290 £2.290

 

¹if your income exceeds £100,000, your PA is reduced by £1 for every £2 of the income over that limit. So, if your income is large enough, your PA can be reduced to nil. This reduction applies to all age limits.

Income tax rates and bands for the tax year 2016-17

Income tax is a tax on “taxable income”, which includes earnings from:

  • Employment
  • Self-employment
  • Most pensions income (state, company and personal/private pensions)
  • Interest on most savings
  • Dividends on shares
  • Rental income
  • Trust income

After deducting your Income Tax Personal Allowance and allowable expenses, the amount of the tax you have to pay is calculated using the following tax rates and tax bands:

 

Income Tax Rate Income from…to… Income tax rate on non savings income Income tax rate on savings Income tax rate on dividends
Starting rate for savings Up to £5,000 Not available 10% (0% from 2015 to 2016) Not applicable
Basic rate Up to £32,000 20% 20% 7.5%
Higher rate £32,001 to £150,000 40% 40% 32.5%
Additional rate Over £150,001 45% 45% 38.1%