Personal Allowance

Question 1

What is personal allowance (PA)?

Answer 1

Level of tax free income available to UK taxpayers

Question 2

What happens to PA?

Answer 2

Is deducted from Net Income to get Taxable Income. It’s deducted from non-savings income, savings income and dividend income

Question 3

Normal PA

Answer 3

£12,570

Question 4

When is Normal PA reduced to nil?

Answer 4

When a person’s adjusted net income (ANI) exceeds £100,000

Question 5

What is adjusted net income (ANI)?

Answer 5

Net income - gross amount of personal pension contributions and gift aid donations

Question 6

What is net income?

Answer 6

Total income - (Gross pension contributions to an employer’s occupational pension scheme, loss relief, deductible interest payments)

Question 7

Why is someone with an ANI of £125,140 or more is not entitled to any personal allowance?

Answer 7

(£125,140 - £100,000) / 2 = £12,570

£100,000 is when a person’s income exceeds by £100,000

Question 8

Amount of transferrable personal allowance?

Answer 8

£1,260