PERSONAL ALLOWANCES (PA)

2018/19

2017/18

Notes

Personal allowance - born after 5.4.1948

£11,850

£11,500

Each person is entitled to this basic PA.

Married couples allowance  (MCA) - elder born before 6.4.1935

£8,695

£8,445

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 £869.50 in 2018/19.

3. MCA is reduced by £1 for every £2 of income that exceeds £28,900 in 2018/19 (£28,000 in 2017/18), 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

£3,360

£3,260

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.

£1,185

£1,150

The transferable MCA could be worth up to £237 in 2017/18 (£230 in 2017/18).

Income limit for personal allowances

You start to lose your PA by £1 for every £2 of taxable income > £100,000 - for 2018/19 if taxable income > £123,700, you lose your PA of £11,850. (in 2017/18 if your income > £123,000, you lose your PA of £11,500).  

£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

£2,390

£2,320

OTHER ALLOWANCES

2018/19

2017/18

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

£5,000

UK and foreign dividends up to £5,000 will be tax free from 6.4.2016 This does not affect dividends you receive in an ISA. This allowance will reduce to £2,000 from 6.4.2018.

Micro entrepreneurs allowance

£1,000

£1,000

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.

INDIVIDUAL SAVINGS ACCOUNT - ISAs

2018/19

2017/18

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

£4,260

£4,128

New child value of Child Trust Fund annual limit

£4,260

£4,128

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

2018/19

2017/18

Notes

Lifetime allowance

£1.030 million

£1 million

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

Annual allowance

£40,000

£40,000

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.