PERSONAL ALLOWANCES (PA)

2019/20

2018/19

Notes

Personal allowance - born after 5.4.1948

£12,500

£11,850

Each person is entitled to this basic PA.

Married couples allowance  (MCA) - elder born before 6.4.1935

£8,915

£8,695

1. MCA is available if either spouse was born before 6.4.1935.

2. Tax relief for MCA is given at 10%, so maximum relief is £891.50 in 2019/20.

3. MCA is reduced by £1 for every £2 of income that exceeds £29,600 in 2019/20 (£28,900 in 2018/19), but not below the minimum amount.

4. MCA is also reduced proportionately in the tax year of marriage.

Married couples allowance - minimum amount for those born before 6.4.1935

£3,450

£3,360

Transferable married couples allowance

This allowance is available to those who are not in receipt of married couples allowance and is only available if both taxpayers are basic rate taxpayers.If a couple marries they’ll get the allowance on a pro-rata basis for the rest of the tax year.

£1,250

£1,190

This allowance could be worth up to £250 in 2019/20 (£238 in 2018/19).If there is a death of one party to the marriage, a divorce or separation, then the allowance continues for the rest of the tax year.

Income limit for personal allowances (PA)

You start to lose your PA by £1 for every £2 of taxable income > £100,000 - for 2019/20 if taxable income > £125,000, you lose your PA of £12,500. (in 2018/19 if your income > £123,700, you lose your PA of £11,850).  

£100,000

£100,000

Taxable income = gross income after adjusting for gross pension, gift aid and losses. The £100,000 limit applies irrespective of your age.

Blind persons allowance

£2,450

£2,390

OTHER ALLOWANCES

2019/20

2018/19

Notes

Rent-a-room relief

£7,500

£7,500

This is the tax-free income you can receive from renting out a room or rooms in your only or main residential home.

Personal savings allowance - basic rate taxpayers

£1,000

£1,000

This is the amount of interest you can now receive tax free - only the excess will be charged to tax at your tax rate.

Personal savings allowance - higher rate taxpayers

£500

£500

Dividend allowance

£2,000

£2,000

UK and foreign dividends up to £2,000 are tax free. This does not affect dividends you receive in an ISA.  

Micro entrepreneurs allowance - If you do sundry trading such as sell services or goods (e.g. on eBay) or rent property (e.g. Airbnb) then you won’t need to declare or pay tax on the first £1,000 of each source of income.

£1,000

£1,000

If your income from property or trading income exceeds £1,000 then you have a choice of deducting your actual expenses or £1,000 if higher.

INDIVIDUAL SAVINGS ACCOUNT - ISAs

2019/20

2018/19

Notes

ISA/NISA annual allowance in tax year

£20,000

£20,000

With ISAs, you pay no tax on income or capital gains and you do not have to declare these on your tax returns. You can invest in cash, stocks or any combination.

New Junior ISA investment annual limit

£4,368

£4,260

New child value of Child Trust Fund annual limit

£4,368

£4,260

LISA - annual limit for those aged 18-40

£4,000

£4,000

Lifetime ISA is a valuable savings option to help towards saving flexibly for the long term or to purchase a first property.

PENSIONS SAVINGS - TAX RELIEF

2019/20

2018/19

Notes

Lifetime allowance

£1,055,000

£1,030,000

This is a limit on the value of retirement benefits you can draw from pension fund.

Annual allowance

£40,000

£4,000 if you already started drawing a pension

£40,000

£4,000 if you already started drawing a pension

The maximum that can be paid into a pension scheme that attracts tax relief, except for those earning >£150,000 when it reduces on a tapering basis up to a minimum amount of £10,000.