Personal Allowance directly relates to Income Tax, and refers to the amount Britons will not have to pay tax on. Usually, many people will look towards the approaching Budget for significant financial changes to be announced. However, there are some details which have already been confirmed ahead of this all-important date.
It is worth noting, however, instances where someone’s Personal Allowance could be bigger.
This will occur, for example, if someone is claiming Marriage Allowance or Blind Person’s Allowance, which can officially be received by eligible people through HMRC.
However, if a person’s income is over £100,000, they are classified as a high earner, and therefore their Personal Allowance will be a smaller sum.
These individuals can expect to lose £1 of their Personal Allowance for every £2 of income which falls above the limit.
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Changes to Personal Allowance will affect hundreds of thousands of people right across the country, and the full details have been explained.
In the forthcoming tax year, Personal Allowance, alongside the Higher Rate Threshold are both set to increase.
The increase will take place in line with the Consumer Price Index (CPI) figure as recorded in September – which many people will commonly know as inflation.
This will mean individuals can expect to receive in increase to Personal Allowance of 0.5 percent when the next tax year starts.
In fact, some Britons may have already been personally informed of this change, through a letter sent out by HMRC.
In this letter, an individual’s tax code will be laid out, which corresponds to the Personal Allowance they are due to receive.
With a 0.5 percent increase, the Personal Allowance rate will be rising to £12,570.
However, this will not just have an effect on the Personal Allowance rate, but also the higher rate threshold.
In term of the higher rate threshold, Britons can expect a rise to £50,250, which will undoubtedly have an impact on some taxpayers.
The changes to Personal Allowance were first outlined at the end of last year in the Chancellor’s economic statement.
However, the reference to the allowance was small, which means some may have missed the announcement.
In addition, as the new tax year approaches, many will wish to understand and confirm their entitlement and the tax they will be required to pay.
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