Personal Allowance
Some of the income you earn is tax free, up to your personal allowance, each year. For most people their personal allowance is £10,600, which means you can earn up to £10,600 each year before paying any tax.
If you were born before 6 April 1938 you may be entitled to an additional personal allowance called the Age Allowance, do not get excited it is only an additional £60. The age allowance is not available to anyone born after this date and is gradually being phased out. Age allowance is reduced by £1 for every £2 of income above £27,700 so if you earn above £28,200 the £60 is removed. This anomaly will probably disappear altogether next year if, as is likely, the personal allowance rises above £10,660.
Your Personal Allowance may also be bigger if you get Blind Person’s Allowance an additional £2,290 (2015/16).
For anyone whose annual income is higher than £100,000, the personal allowance reduces by £2 for every £1 you earn over £100,000. So if you earn over £121,200 your personal allowance is reduced to nil.
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