What is the 2018-19 tax free personal allowance?

The Personal Allowance amount changes annually at the start of the new financial year on the 6th April and is important for both employed tax payers under PAYE and the self employed.

For the tax year 2018-19, starting on 6th April 2018, the Personal Allowance amount is going up to £11,850.

This means if you are a basic rate tax payer you will pay roughly £70 less tax in the 2018/2019 tax year.

For higher rate tax payers the higher rate threshold has moved up to £46,350 from £45,001 resulting in a tax saving in the region of £270.

What is the tax free Personal Allowance?

When you only think about something on an annual basis, it’s easy to forget the definition in between times. The UK tax free Personal Allowance is the amount you can earn before you have to pay any income tax and is usually changed in the budget each tax year by the Chancellor of the Exchequer.

Does this change my tax code?

Yes, you will get a new tax code to incorporate the new Personal Allowance amount. You will get a P2 notice of coding form through the post from HMRC informing you of your situation. You must check this for accuracy; mistakes can be made by HMRC and your employer which mean that you can end up paying the wrong amount of tax.

The new standard tax code will be… 1185L

Will the tax bands change at the same time?

Yes, the tax bands often change at the start of the new tax year. The new figures for 2018-19 are:

  • Basic Rate: £11,850
  • Higher Rate: £46,350
  • Additional Rate: Over £150,000
  • Transferable married couples allowance: £1185
  • Personal Savings Allowance (Basic Rate taxpayers): £1000
  • Personal Savings Allowance (Higher Rate taxpayers): £500
  • Dividend Allowance: £2000
  • Blind Persons’ Allowance: £2390

Does Scotland follow the same rates as the rest of the UK?

No, the Scottish government now has the power to set its own tax bands and rates of income tax. So, if you live in Scotland, you need to work out your finances based on rates as decided by the Scottish government.

The Personal Allowance amount applies in the same way and income generated from dividends and savings is subject to the same rates as the rest of the UK.

When do these new figures apply?

These figures apply from 6th April 2018 until 5th April 2019; a full UK tax year.

I’m not sure about my tax situation…

You are not alone; our tax system is notoriously complicated with regulations that contain details for every possible employment scenario. Just wading through to find out what applies to you is time consuming. Your tax code is only part of your overall tax position and is not the only reason why you can overpay tax and could be owed a tax rebate through the PAYE system.

Tax free personal allowances

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