Personal Allowance
Definition
Tax allowances are concessions by the Inland Revenue which can be used to reduce a person's Taxable Income. The main allowance for UK taxpayers is the 'personal allowance'; which is an amount of income that is tax free. In the tax year 2005-2006 the personal allowances are:
- Under 65: £4,895
- 65-74: £7,090
- 75+: £7,220
The personal allowances for elderly people are reduced if their total income exceeds £19,500, and the amount of the reduction if £1 for every £2 of the excess. So someone aged 68 with a Total Income of £19,800 would get a personal allowance of £7,090 less £300 = £6,790.
Other allowances are:
- Married Couple's Allowance: only available to couples where one person is 65 or over
- Blind Person's Allowance: £1,610