Personal allowance

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In the UK tax system, Personal Allowance is the level above which income tax is levied on an individual's annual income. A person who receives less than his/her personal allowance in taxable income (such as earnings and some benefits) in a given tax year does not pay income tax; otherwise, tax must be paid according to how much is earned above this level. Certain residents are entitled to a larger personal allowance than others. Such groups include the over 65s (followed by an increased allowance for over 75s), blind people, and married couples where at least one person in the marriage (or civil partnership) was born before 6 April 1935.

Married Man's allowance[edit]

Married Man's allowance was the allowance for a legally married couple. The allowance was given at the man's highest rate of tax. During the early 1990s the then Chancellor Norman Lamont overhauled the allowance and introduced the 10% allowance, which meant that all men had the same amount of money in their pocket, irrespective of highest tax rate. The allowance was scrapped from April 2000, first being announced in Gordon Brown 1999 budget,[1][2][3] with the exception of people married or in civil partnerships where one spouse was born before 6 April 1935.

10p Tax[edit]

The starting rate of income tax, often known as the 10p rate, was the lowest rate of personal income taxation in the United Kingdom from 1999 to 2008. It was introduced by then Chancellor of the Exchequer, Gordon Brown, in his 1999 budget and abolished by him (in his last budget as Chancellor) in 2007.


The starting rate was introduced in Gordon Brown's third budget as Chancellor.[4] It applied to income between £4,335 and £5,835 and was charged at 10%,[5] replacing a previous 23% basic rate.[6] By 2008 the starting rate had been raised to apply to income between £5,225 and £7,455.[7] The starting rate was the lowest rate of income tax, and as such was the only income tax paid by 1.8 million of the lowest earners.[4] Gordon Brown said of its introduction:[8]

"The 10p rate is very important because it's a signal about the importance we attach about getting people into work and it's of most importance to the low paid. This is not about gimmicks; this is about tax reform that encourages work and families, on the families side it is replacing what was an anomalous married couples' allowance and replace it with a child tax credit."


The 2007 budget, Gordon Brown's last act as Chancellor, abolished the starting rate tax rate from April 2008.[9] This meant that all income above the personal allowance (£5,435 in 2008) and below the higher rate band would be taxed at 20%, with the effect that taxpayers earning above the personal allowance would be up to £232 worse off each year.[10] The abolition of the band came into effect at the start of the 2008 tax year and was the source of considerable criticism. High profile figures protested, including former minister Frank Field.[11] The Chancellor announced in May 2008 that the 2008-09 personal allowance would be increased by £600 from £5435 to £6035.[12] This was done to help low-income tax-payers affected by the abolition of the 10% starting rate of income tax. At the same time the threshold at which someone starts to pay higher rate tax was reduced by £600, so that higher rate tax payers would not benefit from the change. The change was implemented in September 2008. The enhanced personal allowance will be increased in 2009-10 to £6475.[13]

On 22 June 2010, the new Chancellor George Osborne, as part of the coalition deal which seeks to increase the Personal Allowance to £10,000 from April 2015,[14] made the first increase of £1,000, making it £7475 for the 2011-12 tax year.[15] During the 2011 Budget, the allowance was raised by £630 to £8,105 from April 2012.[16] In 2013, George Osborne revised the plans to increase the Personal Allowance and bring forward to date at which it would reach the £10,000 target. This resulted in the allowance being raised to £9,440 from April 2013, before being increased to £10,000 from April 2014, a year earlier than originally planned.[17][18][19]

List of allowances[edit]

Year Allowance (£) - -
Age under 65 Age 65-74 Age over 75
2000–01 4,385 - -
2001–02 4,535 - -
2002–03 4,615 - -
2003–04 4,615 - -
2004–05 4,745 - -
2005–06 4,895 - -
2006–07 5,035 - -
2007–08 5,225[13] - -
2008–09 6,035 - -
2009–10 6,475 - -
2010–11 6,475 - -
2011–12 7,475 - -
2012–13 8,105 - -
2013–14 9,440[20] 10,500 10,660
2014–15 10,000[20] 10,500 10,660
2015-16 10,500[21] - -


  1. ^ "Gordon Brown: A decade of Budgets". BBC News. 2007-03-18. 
  2. ^ Whitehead, Tom; Hope, Christopher (2009-01-01). "Married couples 'punished by tax system'". The Daily Telegraph (London). 
  3. ^ "Hague's marriage tax breaks slammed". Daily Mail (London). 2014-04-19. 
  4. ^ a b "Budget 1999: budget report:Chapter 4 - Increasing Employment Opportunity". HM Treasury. 
  5. ^ "Inland Revenue Tax Calculation Guide 2000" (PDF). HMRC. 
  6. ^ "New Ambitions for Britain - Budget 1998". HM Treasury. 
  7. ^ "2008 Tax Calculation Guide" (PDF). HMRC. 
  8. ^ "Digesting the Budget". BBC News. 10 March 1999. 
  9. ^ "Budget 2007: report". HM Treasury. 
  10. ^ Kelly, Jon (7 April 2008). "Low-earners fear tax changes". BBC News. Retrieved 2008-05-19. 
  11. ^ "Frank Field: Frank – but so sorry". London: The Independent. 18 May 2008. Retrieved 2008-05-18. 
  12. ^ "Full Statement - Tax Changes". BBC News. 2008-05-13. Retrieved 2009-05-30. 
  13. ^ a b "Rates and Allowances - Income Tax". HM Revenue & Customs. Retrieved 2009-05-30. 
  14. ^ Wall, Emma (2010-05-21). "How does the Budget affect me? Income Tax". The Daily Telegraph (London). 
  15. ^ "Emergency Budget 22 June 2010". HM Revenue & Customs. Retrieved 2010-06-25. 
  16. ^ Cooper, Rob (2011-03-23). "Osborne: 'I'm the man with a plan'... Chancellor's Budget cuts fuel duty, reduces income tax and slashes red tape and business costs". Daily Mail (London). 
  17. ^
  18. ^ Hall, James (2012-03-22). "Budget 2012: Hidden blow in raised personal tax allowance". The Daily Telegraph (London). 
  19. ^ Mason, Rowena (2013-03-20). "Budget 2013: Millions of workers get £100 tax cut". The Daily Telegraph (London). 
  20. ^ a b Collinson, Patrick (2013-03-20). "2013 & 2014 Personal Allowances". London: the guardian. Retrieved 2013-03-21. 
  21. ^