Personal allowance Archives

Tax-Free Personal Allowance Thresholds & Tax Bands (2022/23 to 2016/17)

May 28, 2022/in 2016, 2017, 2018, 2019, 2020, 2021, 2022, 2023, Accountancy, Accountants, Annual threshold, Band rates, Dulwich, HMRC, London, Personal allowance, Personal Tax Account, South London, Tax, Tax accountants, Tax advice, Tax advisers, Tax calculation, Tax-free allowance, thresholds, Tulse Hill/by Mark

Today we look at the tax-free allowance thresholds for what’s officially known as the tax-free Personal Allowance in the tax and accountancy world.

The Tax-Free Personal Allowance

This is the amount a UK individual can earn as income before they have to pay any Income Tax. In the current tax year (6 April 2022 to 5 April 2023) individuals can earn up to £12,570 before they have to start paying Income Tax, as you’ll see in the first table. In other words, if their taxable income is two thousand pounds more than that, they’ll only have to pay income tax on the extra £2000, not the core £12,570. There are exceptions, and different rules applied before 2016/17, but our aim is to keep things simple in this guide rather than focusing on more rare exceptions. So, below, we show the Personal Allowance thresholds for tax-free income over the last 7 tax years. As you will see, the Tax-Free Personal Allowance has gradually increased over the years.

Tax Bands for Basic Rate, Higher Rate and Additional Rate Taxpayers

The tables also show the various tax bands for earnings above the Personal Allowance threshold. These are the Basic Rate, Higher Rate and Additional Rate income tax bands, with tax rates increasing the more people earn. The information might be useful if you owe income tax from previous years but bear in mind that anyone born prior to 6 April 1948 may be entitled to a larger Personal Allowance.

Please note: this guide focuses only on Income Tax. Taxpayers will also need to allow for other deductions like National Insurance, which we’ll cover in a separate guide, and things like pension contributions, any student loan interest repayments, any tax on dividends, and so on.

Tax-Free Allowance Thresholds 2022/23

For the tax year 6 Apr 2022 to 5 Apr 2023:
The first £12,570 (your Personal Allowance) is tax-free*
Earnings between £12,571 and £50,270 are taxed at 20% (‘Basic Rate’ income tax)
Earnings between £50,271 and £150,000 are taxed at 40% (‘Higher Rate’ income tax)
Earnings over £150,000 are taxed at 45% (‘Additional Rate’ income tax)

* For every £2 earned above £100,000, the Personal Allowance is reduced by £1. It therefore reduces to zero for earnings of £125,140 or more.

Tax-Free Allowance Thresholds 2021/22

For the tax year 6 Apr 2021 to 5 Apr 2022:
The first £12,570 (your Personal Allowance) is tax-free*
‘Basic Rate’ earnings between £12,571 and £50,270 are taxed at 20%
‘Higher Rate’ earnings between £50,271 and £150,000 are taxed at 40%
‘Additional Rate’ earnings over £150,000 are taxed at 45%

* For every £2 earned above £100,000, the Personal Allowance is reduced by £1. It therefore reduces to zero for earnings of £125,140 or more.

Tax-Free Allowance Thresholds 2020/21

For the tax year 6 Apr 2020 to 5 Apr 2021:
The first £12,500 (your Personal Allowance) is tax-free*
‘Basic Rate’ earnings between £12,501 and £50,000 are taxed at 20%
‘Higher Rate’ earnings between £50,001 and £150,000 are taxed at 40%
‘Additional Rate’ earnings over £150,000 are taxed at 45%

* For every £2 earned above £100,000, the Personal Allowance is reduced by £1. It therefore reduces to zero for earnings of £125,000 or more.

Tax-Free Allowance Thresholds 2019/20

CIS Sub-contractors – Claim Your Tax Refund Now!

March 28, 2022/in 2020, 2021, 2022, Accountancy, CIS, Construction Industry Scheme, Income & Expenditure, Income tax, Personal allowance, Refund, South London, Subcontractor, Tax, Tax refunds, Tulse Hill/by Mark

[Updated April/May 2022]: It’s now time to start the process of claiming your tax refund if you are a sub-contractor working within the Construction Industry Scheme (‘CIS’). Refunds are usually fast through Taxfile.

What you need to do

Don’t delay – book an appointment with Taxfile today by calling 0208 761 8000 and we’ll sort it all out for you. We have staff who speak English, Polish, Pashto, Dari, Russian, French, and Dutch, should you need them on the day. Our Tulse Hill office is at 25 Thurlow Park Road, London SE21 8JP. Call 0208 761 8000 for an appointment — the first 20 minutes is free! Alternatively, you can have a ‘virtual’ appointment with us on Zoom, Teams, Google Hangouts, Skype, FaceTime, WhatsApp or whatever you prefer.

Outside of London? No problem – click here.

We’re open from Monday to Saturday in April & May (including early evenings Mon/Tues)

Our Tulse Hill office is open 6 days a week during April & May and offers Saturday morning appointments plus early evening appointments on Mondays and Tuesdays if standard office hours do not suit you (please call for details).

Check List

PAYE, 2021/22 Tax Thresholds, Employment Allowance & P800s

June 8, 2021/in 2021, 2022, Accountancy, Accountants, Accounts, Bookkeeping, Devon, Dulwich, Employment allowance, FreeAgent, Higher rate tax payers, Income tax, Limited companies, London, NI, NIC, NIC's, P800, Pay-as-you-earn, PAYE, Payroll, Personal allowance, Sage, Software packages, South London, South West, Tax, Tax accountants, Tax advice, Tax advisers, Tax bands, tax rebates, Tax refunds, Taxfile, Tulse Hill, VAT, Xero/by Taxfile

My name is Daniel and I have been a part of the Taxfile family since 2007. It started as a part-time job doing bookkeeping, but as time went on, I developed new abilities and a deeper understanding of the tax world. PAYE, VAT, and Company Register are now my areas of expertise.

I understand how complicated the tax world is, so here are a few PAYE things to consider:

Understanding the tax thresholds for 2021-2022

PAYE is calculated based on how much you earn and whether you are eligible for the personal allowance.

Standard Rate: PAYE income tax is charged at 20%, less a personal allowance of £12,570, this is signified by tax code 1257L.
Higher Rate: For most, income over £50,270 to £150,000 is charged at 40%.
Additional Rate: Income above £150,000 is charged at 45%.

What is the Employment Allowance?

The Employment Allowance allows certain businesses that employ workers to reduce their annual National Insurance (NI) bill by up to £4,000 (for the 2021/22 tax year).
Eligible businesses can claim a reduction against their employer’s Class 1 NI liability up to a maximum of £4,000 each tax year. You can still claim the allowance if the liability was less than £4,000 in a tax year.

You can’t claim if you’re a company with only one employee paid above the Class 1 National Insurance Secondary Threshold (£8,840 for the 2021/22 tax year, up from £8,788 for the 2020/21 tax year) if that employee is also a director of the company.

How will I know if I haven’t paid the right amount of PAYE?

HMRC will send out a P800 tax calculation form after the tax year ends on 5 April, which you should receive by the end of November. This will show how much tax is due to be refunded, or is owed for previous years.

Another significant aspect of Taxfile is that it works with a wide range of accounts software (Sage, QuickBooks, Xero, FreeAgent, VT, Forbes, Moneysoft, and so on) and can accommodate everyone. These are just a few examples, but if you need assistance with any area of PAYE, VAT, or other types of tax, Taxfile and the team are here to help. Call Taxfile on 020 8761 8000, book a free appointment (in-person and phone or video call options are available) or simply message us your tax-related query and we’ll be happy to help. We are accountants and tax experts in South London and the South West.

This post was brought to you by Daniel at Taxfile.

Tax Time! Opening on Saturdays as of November.

October 15, 2019/in 2019, 2020, Book keeping, Bookkeeping, payments on account, Personal allowance, Self-assessment, Self-employed, Tax, Tax calculation, UTR/by Taxfile

Need Help Filing Your Tax Return?
Make an Appointment to Beat the Rush!

Your Self Assessment Income Tax for 2019-20 will need to be submitted and an initial payment be made to HMRC by no later than 31/01/2021. This means that you need to calculate your income tax for the period 06/04/2019 through to 05/04/2020. We urge anyone who needs to file a 2019/20 Self-Assessment tax return to come and see us soon. By doing so, you’ll avoid the last minute stampede — way too many people leave it until December or January, which is the busiest time in the tax and accounting calendar. While the HMRC deadline for tax returns is the end of January, you run the risk of being caught up in the bottleneck if you leave things later than December. Taxfile files tax returns for thousands of customers during November, December and January, so we’re incredibly busy at that time of year. So, those leaving it until the last minute not only run the risk of being charged more to cover the long hours and overtime that we need to work during January, but they also risk receiving a fine from HMRC if they miss the deadline completely because they left things so late.

So the message is: please book an appointment with us now, to beat the end of year rush.

For Self-Assessment tax returns, records for the period 6th April 2019 to 5th April 2020 are required. For business accounts, we will also need to do accounts based upon the business’s individual year end.

Open for Saturday Appointments from November

Saturday morning appointments should be more convenient for those who work on weekdays so we will be opening our doors on Saturdays for appointments from 2nd November. Our opening times will be 9am to 1pm by appointment only.

To book an appointment, please call 0208 761 8000 or book an appointment online here. Many thanks.

[Updated 7 August 2020]

The Early Bird Gang

June 7, 2019/in 2019, Band rates, CIS, HM Revenue and Customs, HMRC, Income tax, Landlords, PAYE, PAYE threshold, Personal allowance, Self-assessment, Self-employed, Sole traders, Tax, Tax calculation, Taxfile/by Taxfile

HMRC expects people to do tax returns for various reasons;

Those that have an income outside of a PAYE scheme (i.e. self-employed)
High earners on PAYE schemes, earning above £100K
Company Directors & Shareholders
Landlords who have rental incomes

The tax returns calculated generally run between the dates 06/04/xx through to 05/04/xy, the calculation, submission, and payment deadline of taxes owed to HMRC (or you), would need to be submitted at the latest 31/01/xz, before penalties & interest are imposed.

Each year, the Government announces a tax free allowance, which is the amount you can earn before your income starts to get taxed. The tax free allowance for 2018/19 is £11,850.00. However, this allowance decreases by £1 for every £2 earned above £100k, meaning by the time your reach £125K, the allowance is £0.

The amount of tax paid on income is also specified by the government & is subject to change with announcements made generally in the Budget statements. For 2018-19 the rates are as follows;

Tax Rate (Band)	Taxable Income	Tax Rate
Personal allowance	Up to £11,850	0%
Basic rate	£11,851 to £46,350	20%
Higher rate	£46,351 to £150,000	40%
Additional rate	Over £150,000	45%

*For 2019-20 the new rates & tax free allowance can be found HERE.

Since 6^th April 2019, you would have been able to calculate & submit your 2018/19 tax return to HMRC, so since then the Tax Agents at Taxfile have been busy filing away for the early birds. We have been open on Saturdays too, to keep up with the influx of tax returns & CIS returns.

However, the last Saturday that we will be open will be 29^th June. If you would like to join our ‘gang’ of Early Bird & can only come in on Saturdays, you only have a few weekends left.

Please note, on Saturdays, all our agents see clients by appointment only, and can not generally deal with walk-in clients. So please book in advance by either calling 020 8761 8000 or booking online HERE.

So get our professional help at Taxfile & we’ll make filling in and filing your tax return a breeze.

See our Newsletter HERE

Chancellor Philip Hammond's Autumn Budget Statement, 22 November 2017

The Chancellor’s Autumn Budget 2017

November 24, 2017/in 2017, Accountancy, Autumnn Budget 2017, Budget, Landlords, Personal allowance, Property investment, Stamp Duty, Tax/by Mark

This week, Chancellor of the Exchequer Philip Hammond delivered his Autumn Budget Statement to the House of Commons. View his full 1 hour speech in the official UK Parliament video below, which also includes a response from Jeremy Corbyn, leader of the opposition:

The biggest news from this budget was the Stamp Duty announcement, wherein first time buyers buying a property up to £300,000 in value will no longer pay Stamp Duty at all (saving £5k), nor pay it on the first £300,000 of homes costing up to £500,000. Money man Martin Lewis gave his take on the proposed Stamp Duty changes and answered frequently asked questions pertaining to exactly what defines a first time buyer in an interview on Good Morning Britain yesterday — here is a 5 minute clip:

Other winners included

The Personal Allowance, which is the amount people can earn before they need to start paying income tax, is set to increase by £350 from £11,500 to £11,850 for those earning up to £100k per annum.
The National Living Wage (NLW) will increase from £7.50 to £7.83 per hour from April 2018. This will affect UK workers aged over 25.
The Chancellor promised investment of £160m in 5G mobile networks …
… and a total of £550m for electric cars.
He also set aside an additional £1.5 billion in Universal Credit to help those on benefits.
£40m was set aside for a teacher training fund for under-performing schools in England.
NHS England is to receive £2.8BN in investment (less, though, than the £4BN NHS bosses said is needed).
From April 2018, the Consumer Price Index (CPI) is set to replace the Retail Price Index (RPI) as the inflation measure through which business rates will be calculated. It is anticipated that this change will save businesses £2.3BN in the first three years of the change.
The Chancellor also abolished the very unpopular staircase tax and promised that those affected to date by the staircase tax would see original rates reinstated. Revaluations will take place every three years (previously five) after the next scheduled revaluation in 2022.

Losers included:

The Chancellor revised down the growth forecasts for GDP, productivity growth and business investment.
£3BN was set aside for helping to combat Brexit challenges.
For second property owners, powers have been given to local authorities to charge a 100% council tax premium on empty houses. (See our note about those getting an income from property rental below).

If you have any questions about how the Autumn Budget might affect you, or any queries about any tax or accounting issues and requirements you may have, simply contact Taxfile on 0208 761 8000, send us a message here or book a 20 minute appointment online here and we’ll be happy to help. We also offer specific tax help and accounting for landlords so do get in touch if you would like to make sure you’re claiming no more and no less than you should if you’re getting an income from letting property.

Links to more detailed HMRC information about the Autumn Budget Statement can be read online here.

Highlights from the Chancellor’s Budget, 18 March 2015

March 19, 2015/in 2015, 2016, 2017, Accountancy, Annual Allowance (AA), Annual Investment Allowance, Band rates, Budget, Chancellor of the Exchequer, Flexible ISA, George Osborne, Help to Buy ISA, Higher rate tax payers, HM Revenue and Customs, HMRC, Income tax, Investments, ISAs, National Insurance, National Minimum Wage, NI, NI Class 3, NIC, Personal allowance, Personal Savings Allowance, Self-assessment, Self-employed, Tax, Tax advice, Tax allowance, Tax bands, Tax returns/by Mark

Along with some encouraging news about the UK economy, some interesting new measures were announced in the Chancellor’s Budget yesterday and below we highlight those which we feel will directly impact the majority of UK taxpayers:

As widely forecast, the tax-free allowance will increase. The amount people can earn before paying tax will rise to £10,800 from 2016-17 and then to £11,000 from 2017-18. At the same points in time, higher earners will also receive a two stage increase to the threshold at which they start to pay a 40% rate of tax, with the threshold increasing to £43,300 by 2017-18.
The Chancellor also announced a brand new Personal Savings Allowance whereby the first £1,000 of interest (£500 for higher rate taxpayers) will be tax tree. This new allowance will kick in from April 2016 and will take 95% of taxpayers out of savings tax completely. (Fact Sheet available here).
Another new scheme announced was the introduction of a new ‘Help to Buy ISA’ aimed at prospective first time buyers. This fairly generous scheme means that the Government will chip in up to £50 extra per month (up to a ceiling of £3,000) when an eligible saver saves up to £200 per month towards their first home. (Fact Sheet available here).
In another ISA reform, savers will now be able to withdraw money from a new Flexible ISA and deposit it back later in the same financial year without losing any of their usual ISA tax benefits. £15,240 will be able to be put into this re-styled savings vehicle. Read more

How the Chancellor’s 2014 Autumn Statement affects YOU!

December 5, 2014/in 2014, Accountancy, Accountants, Chancellor of the Exchequer, Chancellor's Autumn Statement, Corporation tax, Dulwich, George Osborne, ISAs, London, National Insurance, NI, NIC's, Personal allowance, Rates, SME, South London, Stamp Duty, Stamp Duty Land Tax, Tax, Tax avoidance, Tax bands, Taxes, thresholds, Tulse Hill, Value Added Tax, VAT/by Mark

George Osborne, the Chancellor of the Exchequer, announced his Autumn Statement on Wednesday (3 Dec 2014) in what could be seen as a mini budget. Here we focus on the key announcements, concentrating on those relating purely to taxation, as it is those which affect you, our customers, most directly.

1). First some good news: The UK is seeing the fastest growth out of all the G7 countries, and the number of people employed is at its highest point ever. This is good for all of us because it restores optimism in the UK economy, higher employment speaking for itself.

2). As we announced in a separate blog post, Stamp Duty (Land Tax) has been given a major shake-up and, for anyone buying a house for £935,000 or less, the amount of Stamp Duty which they’ll have to pay will be less, and sometimes very significant. See our separate blog post and infographic for more detail.

3). In the financial year 2015-16, the tax-free personal allowance (which is the amount you can earn before you start to pay any tax) will increase to 10,600 which is an increase of £600. So … more tax-free money in your pocket, which is good.

4). Economy flights will become cheaper for under 12s from 1 May 2015 and under 16s from 1 March 2016, because their tickets will become exempt from tax on those dates. So … a small concession, but another welcome one. Average 4-person families will save £26 for flights within Europe and £142 on flights to the U.S.

5). From 3 December 2014, spouses will be able to inherit their partner’s ISA benefits should their partner pass away. Currently this is not the case and the change will mean that, from 6 April 2015, the surviving spouse or civil partner will be able to Read more

The Chancellor’s Budget, March 2014

March 20, 2014/in 2014, AIA, Annual Investment Allowance, Annuities, Budget, Capital gains tax, CGT, Chancellor of the Exchequer, George Osborne, Higher rate tax payers, IHT, Income tax, Inheritance Tax, Interest rates, ISAs, NISAs, pension contributions, pension scheme, Pensions, Personal allowance, savings income, Stamp Duty, Tax, Tax allowance, Tax bands/by Mark

The Chancellor, George Osborne, has now presented his March 2014 Budget to Parliament. There was lots of talk about the economy, growth forecasts, supporting UK businesses and employment – as well as some obvious political spin bearing in mind the European and General Elections are just around the corner – however we thought we’d concentrate on the most important changes, mainly in relation to tax itself as that’s what is going to affect Taxfile customers and readers the most. So here is our snapshot:

For individuals:

The threshold before earnings are subject to income tax (the ‘tax-free personal allowance’) is set to rise to £10,500;
The higher rate of tax will kick in for earnings above £41,865 from April 2014, rising again to £42,285 in 2015;
The first part of the ‘Help to Buy’ equity loan scheme for those aspiring to buy a new home is to be extended until 2020 (previously 2016);
The Stamp Duty on homes worth over £500k is to increase to 15% for those which are bought by companies;
Inheritance tax will be scrapped for members of the emergency services who “give their lives protecting us”;
Cash and Shares ISAs will be merged into a single New ISA (“NISA”). The annual tax-free limit for the NISA will be £15k (£4k for junior equivalent) from 1 July 2014.
From April 2015, pensioners will no longer be forced to buy an annuity with their pension fund. They will now be able to cash in as much or as little as they want to from their pension pot.
From June 2014, the amount people will be able to invest into Premium Bonds will increase to £40k (from £30k). From 2015 this will rise again to Read more

Autumn Statement by the Chancellor of the Exchequer

December 9, 2013/in Accountancy, Accountants, Buy to let, Capital gains tax, CGT, Chancellor's Autumn Statement, Dulwich, Employee, Employer, IHT, Income tax, Inheritance Tax, ISAs, Land and property, Landlords, Lettings, Lettings income, London, Married couple's allowance, National Insurance, NIC, NIC's, Non-domiciled residents, Non-resident, Personal allowance, property investor, residency, savings income, South London, Tax, Tax accountant, Tax accountants, Tax advice, Tax advisers, Tax agents, Tax allowance, tax experts/by Mark

On 5 December 2013 George Osborne, Chancellor of the Exchequer, gave his Autumn Statement in Parliament. Key announcements included:

A rise for the Personal Allowance, as was long-anticipated, to £10,000 in 2014/15;
the higher 40% tax rate threshold also increasing to £41,865;
A new, transferable, tax allowance of £1,000 for married couples and those in civil partnerships from April 2015;
For employees aged under 21 employers will not have to pay Class 1 National Insurance (‘NI’) Contributions on earnings up to the Upper Earnings Limit;
Capital Gains Tax (‘CGT’) for future gains will now also apply to NON-resident individuals from April 2015 (previously this had been applied only to UK resident landlords);
For 2014/15 the annual ISA subscription limit will increase to £11,880 (of which £5,940 can be in cash);
There were also announcements relating to the continuing clamp-down on tax avoidance, improvements and plans for UK infrastructure, and the proposed inheritance tax (‘IHT’) simplification for trusts.

The full speech transcript can be read here or alternatively view the following video recording: Read more