Personal Allowance 06.04.16

The personal allowance is the amount of money you can earn without having to pay tax on it. It is calculated over the tax year which runs from 06 April to 5 April each year so if you are on PAYE, this amount is calculated per pay period (i.e divided by 12 for a monthly payroll)  After this amount has been earned, tax is paid at different rates as follows:-

The personal allowance is to increase to £11,000

The basic rate band is to increase to £32,000 (20%)

The higher rate limit will increase to £43,000 (40%)

Further increases are in place for the following year and legislation is also to be introduced so that the basic personal allowance will increase automatically in line with the equivalent of 30 hours a week at the National Minimum Wage for over 21s until the personal allowance reaches £12,500. In linking the personal allowance with the National Minimum Wage it will ensure that anyone working up to 30 hours per week on Minimum Wage will not pay any tax, however National Insurance would be payable.