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UK residents receive the first portion of their income free from tax. This is known as their personal allowance. Earnings above the personal allowance are taxable according to how much is earned.

The personal allowance for the tax year 2007-08 for residents under 65 was £5225, and this was increased to £6035 for the tax year 2008-09.[1]

Certain residents are entitled to a larger personal allowance than this. These include the over 65s, the blind, and married couples where at least one person was born before 6 April 1935.

The Chancellor announced in May 2008 that the 2008-09 personal allowance would be increased by £600 from £5435 to £6035.[2] 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.[1]

Notes

  1. ^ a b "Rates and Allowances - Income Tax". HM Revenue & Customs. http://www.hmrc.gov.uk/rates/it.htm. Retrieved 2009-05-30.  
  2. ^ "Full Statement - Tax Changes". BBC News. 2008-05-13. http://news.bbc.co.uk/1/hi/uk_politics/7399057.stm. Retrieved 2009-05-30.  

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