Each year, almost everyone in the UK is entitled to earn a certain amount of money before you start paying tax. This is called your Personal Allowance.
The amount generally changes every year and so here is our guide to how much you can earn before paying tax in 2011.
The amount of your personal allowance depends on your age and your total income in the tax year (including pensions, interest, rental income etc).
If you are under the age of 65 and you earn less than £100,000 per year, the Personal Allowance is £7,475. This means that you can earn up to this amount before you start to pay tax.
If you are aged between 65 and 74 the Personal Allowance is £9,940 and if you are 75 or over it is £10,090. If you are over 65 and earn £24,000 or more your Personal Allowance will be reduced by £1 for every £2 you earn over £24,000.
If you already pay tax through your job or pension, or if you complete a Self Assessment tax return, you should receive a Personal Allowance automatically.
Most people in the UK are entitled to the full Personal Allowance. However, if you have underpaid tax in previous tax years or you have other jobs, income or benefits to take into account your Personal Allowance may be reduced to take these into account.
Blind Persons Allowance
Blind Persons Allowance is available to you if you are certified blind and are on a local authority register of blind persons. The allowance for the 2011/12 tax year is £1,980 and this is in addition to any Personal Allowance you receive.
Married Couples Allowance
You can claim Married Couple’s Allowance if you’re married or in a civil partnership, you’re a taxpayer and you or your spouse or civil partner were born before 6 April 1935.
In the 2011/12 tax year, the minimum amount is £2,800 and the maximum amount of Married Couple’s Allowance is £7,295. You receive 10 per cent of the allowance amount – which means your tax saving is at least £280 and up to £729.50. The actual amount depends on your income.