Personal Tax Allowance 2013/14
For those aged under 65 the personal allowance will be increased from £8,105 to £9,440. This increase is part of the plan of the Coalition Government to ultimately raise the allowance to £10,000 which will be achieved from 2014/15.
The reduction in the personal allowance for those with ‘adjusted net income’ over £100,000 will continue. The reduction is £1 for every £2 of income above £100,000. So, for 2012/13, there is no allowance when adjusted net income exceeds £116,210. For 2013/14 the allowance ceases when adjusted net income exceeds £118,880.
From 2013/14 the higher age related personal allowances will not be increased and their availability will be restricted to people who were born before 6 April 1948.
Tax planning should be considered before 6 April 2013 where adjusted net income is expected to exceed £100,000. Broadly, adjusted net income is taxable income from all sources reduced by specific reliefs such as Gift Aid donations and pension contributions. Consider whether these could be made to protect some or all of the personal allowance.
Alternatively, for those running their own company, the timing of dividend receipts from the company should be considered.
Personal Tax allowance 2014/15
The personal allowance for people born after 5 April 1948 will be increased to £10,000. The personal allowance will then increase in line with inflation.Tags: personal tax allowance 2013, Personal tax allowance 2014/15