How much can you earn without paying taxes in 2013? It’s a question that millions of taxpayers are asking, and so we have put together a guide to the changes to your Personal Allowance in 2013/14.
We also look at changes to other allowances and examine how much you’ll be able to earn before you start paying tax in 2013/14. Keep reading to learn more.
Your tax free income in 2013-14
Your Personal Allowance is the amount of income you are allowed to earn each year before you start to pay tax. The vast majority of taxpayers are eligible for the basic Personal Allowance. The chart below shows the basic Personal Allowance in the tax year 2012/13, the 2013/14 tax year and the increase between the two years:
|Born after 5/4/1948||£8,105||+£1,335||£9,440|
|Born between 6/4/1938 and 5/4/1948||£10,500||+0||£10,500|
|Born before 6/4/1938||£10,660||+0||£10,660|
This means that if you were born after 5 April 1948 and you’re eligible for the full Personal Allowance in 2013/14, you can earn £9,440 of income before you’ll start to pay tax.
Other allowances in 2013/14
If you are married and living together, were married before 5 December 2005, and at least one spouse was born before 6 April 1935, the husband can claim Married Couple’s Allowance.
If you are married or in a civil partnership and living together and at least one spouse or partner was born before 6 April 1935, the person with the higher income can claim Married Couple’s Allowance.
HMRC reduce your tax bill by ten per cent of the Married Couple’s Allowance to which you’re entitled. The actual amount depends on the relevant person’s income.
If you’re certified blind and are on a local authority register of blind persons, or if you live in Scotland or Northern Ireland and you are unable to perform any work for which eyesight is essential, you can claim Blind Person’s Allowance.
Blind Person’s Allowance is rising by £60 in 2013/14 from £2,100 to £2,160.
The tax you will pay on the rest of your income
If you earn less than the allowances above then you’ll generally pay no tax on your income. However, if you earn more than your total allowances then you’ll pay tax on your income above this amount at the following levels:
|20% – basic rate||£0 -£34,370||£0 – £32,010|
|40% – higher rate||£34,371 to £150,000||£32,011 to £150,000|
|45% – additional rate||N/a||Over £150,000|
|50% – additional rate||Over £150,000||N/a|
You will notice that the point at which you start to pay the higher rate of Income Tax will decrease to £32,010 in 2013/14.
In addition, the additional rate of tax has fallen from 50% to 45%. This means that you will pay a rate of 45% on your taxable earnings over £150,000.