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Tax Allowances in the New Tax Year 2011/12

When the Chancellor of the Exchequer delivers his annual Budget, he will generally make changes to the tax regime for the following tax year.  So, as we are now into a new tax year – 2011/12 – our guide investigates the new levels of tax allowances that have come into effect since 5th April, 2011.

Personal Allowance

Your personal allowance is the amount of money that you are able to earn before you pay any tax.  The level of Personal Allowance generally rises each tax year, and it has risen again for the tax year 2011/12.

The amount of your Personal Allowance depends on your age and your total income in the tax year – including personal interest on savings, pensions and so on.

The three levels of Personal Allowance in the 2011/12 tax year are:

  • Basic – £7,475 (with an income limit of £100,000)
  • Age 65-74 – £9,940 (with an income limit of £24,000)
  • Age 75 and over – £10,090 (with an income limit of £24,000)

If you become 65 or 75 during the year to 5 April 2012, you are entitled to the full allowance for that age group.

If you are 65 or over and your income is between £24,000 and £100,000 your age related Personal Allowance is reduced by half of the amount you have over the £24,000 limit until the basic allowance is reached.

As far as the basic Personal Allowance goes, this means that you can earn up to £7,475 in the 2011/12 tax year before you pay any income tax.

Blind Person’s Allowance

Blind Person’s Allowance for the tax year 2011-12 is £1,980.  There are no age or income restrictions.

If you are registered blind with your local authority, your Blind Person’s Allowance is added onto your Personal Allowance to determine the amount of money you can earn without paying tax.

So, if you are under 65 and claim both allowances, you can earn £9,455 (£7,475 Personal Allowance plus £1,980 Blind Person’s Allowance) before you pay any tax.

Married Couple’s Allowance

The maximum amount of Married Couple’s Allowance for the 2011/12 tax year is £7,295 and the minimum amount is £2,800.

You receive 10 per cent of the allowance amount – which means your tax saving (based on a full year’s eligibility) is at least £280 and up to £729.50. The actual amount depends on your personal income.

Jacqueline Duckworth - Wednesday, May 18th, 2011

My friend will be 65 years old in February 2012.Should she be receiving the full age related personal allowance of 9940.00 for the whole of the 2011/2012 tax year,or is it just the basic of 7475.00,and then the extra amount just from her birthday in February up to April 2012? She is well within the income limits!

William A.M. Cutting - Friday, January 18th, 2013

My wife’s total income is from her state pension for the year April 2011-2012 was £3,193 and from her share of our savings income £185 making a total of £3,378. Therefore she does not need the total of her Tax allowance and most of her expenses are paid by me, her husband. We are both over 75 years old. How do these matters relate to our Tax allowance?