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Personal Taxation & Wages

What is the 2019-20 Personal Allowance?

The Personal Allowance amount will be £12,500 during the 2019/20 tax year. That is £650 more than the 2018/19 tax year.

What is the personal allowance for?

Your tax free personal allowance is the amount you are allowed to earn without having to pay any tax. So, in the 2019/20, you can earn up to £12,500 without paying any income tax.

When does the new tax free personal allowance amount apply?

The new tax free personal allowance amount will apply from 6th April 2019 until the 5th April 2020. Currently, the government plans to keep this the same for the 2020/21 tax year, but this could change.

Does the new Personal Allowance amount affect my tax code?

Yes, the Personal Allowance amount is part of your tax code’s calculation, so it will change. HMRC will announce the new tax codes at the beginning of 2019, just in time for their implementation in April.

Do remember that taxpayers can have different tax codes. Each element of the code represents a different part of your financial circumstances. You need to make sure that yours is correct based on your personal situation, not just in comparison to your colleagues.

An overpayment or underpayment of income tax can easily happen if your tax code is not correct meaning due diligence is important.

Are there any changes to the income tax brackets?

Yes, there are some changes to the income tax bands that come into effect at the same time as the new tax free personal allowance:

  • Basic rate 20%: if you earn between £12,501 and £50,000
  • Higher rate 40%: if you earn between £50,001 and £150,000
  • Additional rate 45%: if you earn over £150,000

Once you earn £100,000, your Personal Allowance amount reduced by £1 for every £2 extra you earn. By the time you earn £125,000, your Personal Allowance is completely cancelled out. This means that those earning from £125,000 are not receiving any tax free Personal Allowance on their income.

These tax bands only apply in England, Northern Ireland and Wales. The Scottish Government set their own income tax rates which will be announced on 12th December 2018.