What about tax allowances?
Everyone can receive a certain amount of income before tax is deducted.We will look at the four main types of allowances.
Personal Allowance
Personal Allowance is the income anyone can receive each year from all sources before tax is deducted. The Personal Allowance for 2017/18 is £11,500. The Personal Allowance reduces by £1 for every £2 the member receives above £100,000.
Blind Person’s Allowance
The blind person’s allowance is added to a person’s tax free Personal Allowance.If the member is married or in a civil partnership and cannot use all this allowance due to low income, it is possible to transfer the allowance to their spouse or civil partner, even though they are not blind.The amount for 2017/18 is £2,290.
Married Couple’s Allowance
The Married Couple’s Allowance includes civil partnerships.There is a slight variation depending on when the person was married.
Before 5 December 2005
If either the member or spouse / civil partner was born before 6 April 1935 the husband’s income is used to work out the Married Couple’s Allowance.
After 5 December 2005
If either the member or spouse / civil partner was born before 6 April 1935 the income of the highest earner is used to work out the Married Couple’s Allowance.
The Married Couple’s Allowance for 2017/18 can reduce a tax liability by £326 to £844.50 per year.
The Married Couple’s Allowance can be transferred to a spouse or civil partner.
If both the member and the spouse / civil partner were born on or after 6 April 1935 it may be possible to claim Marriage Allowance instead.
This allows the claimant to transfer up to £1,150 of their unused Personal Allowance to their spouse or civil partner.
Maintenance Payments Relief
If either the member or the ex-spouse was born before 6 April 1935 and payments are being made under a court order, this allowance may reduce the member’s tax bill.
The maximum reduction in the tax bill is 10% of £3,260 for 2017/18
