• Skip to primary navigation
  • Skip to main content
  • Skip to footer

Top notice bar

Call us on 08000 388799

Avanti Tax Accountants HomepageAvanti Tax Accountants

Bookkeeping, Accountancy and Taxation services

  • Home
  • About Us
  • Our Services
    • Bookkeeping & Accountancy
    • Corporation & Personal Tax
    • Payroll & CIS
    • Company Secretarial Bureau
    • Budgeting, Forecasting & Business Valuations
    • Mentoring & Business Coaching
    • Software & Training
  • Our Accountants
  • News & Insights
  • Send An Enquiry
Home » News & Insights » Basic Personal Allowance

Basic Personal Allowance

Posted on 3rd June 2014

The basic personal allowance is reduced where a person has ‘net adjusted income’ in excess of £100,000. The personal allowance (£10,000 for 2014/15) is reduced by £1 for every £2 by which this limit is exceeded until the allowance is fully abated.

This means that anyone with income of more than £120,000 in 2014/15 loses all their personal allowance.

However, it is possible to preserve entitlement to the personal allowance by reducing income to below £100,000. There are various ways in which this can be achieved, for example by transferring income producing assets to a spouse or civil partner where his or her income is below £100,000.

Likewise, adjusted net income can be reduced by making pension contributions, which is in itself beneficial due to the higher rate relief that they receive on contributions up to the available annual allowance. Charitable donations would also work (although the donor would lose the benefit of the donation).

Example:
Julie has adjusted net income of £125,000 for 2014/15, of which £30,000 is in the form of interest from investments. Her husband has income of £10,000 for the year.

As Julie has income for 2014/15 in excess of £120,000, she will lose all the personal allowance for that year. By transferring the investments to her husband, her income is reduced to £95,000 and she retains the personal allowance.

For a higher rate taxpayer paying tax at 40% the saving is even greater

Share this post:

Share on TwitterShare on FacebookShare on LinkedInShare on E-mail

Filed Under: News

Disclaimer:- The information contained herein is given by way of general guidance only and no action should be taken solely on the basis of the information contained herein. The Avanti Group (UK) Ltd will be pleased to provide further guidance on the issues, and how they might affect you. No liability is accepted by the firm for any action taken without seeking appropriate professional advice

Footer

Navigate

  • Find An Accountant
  • About Us
  • News & Insights
  • Privacy Policy
  • Letter Of Engagement

Our Services

  • Software & Training
  • Mentoring & Business Coaching
  • Budgeting, Forecasting & Business Valuations
  • Company Secretarial Bureau
  • Payroll & CIS
  • Corporation & Personal Tax
  • Bookkeeping & Accountancy

Get In Touch

Tel: 08000 388799
Send us an enquiry

  • Facebook
  • Instagram
  • Twitter
Copyright © 2023 Avanti Tax Accountants · All Rights Reserved
Part of The Maurice J Bushell & Co Ltd Franchise (UK) Ltd · Company Reg: 10407313 and The Avanti Group (UK) Ltd · Company Reg: 04635630 · Created by Purple Hippo
  • So we can contact you to discuss your enquiry
  • So a member of our team from your area can contact you
  • By clicking ‘Send Enquiry’ you agree to receive contact from Avanti Tax Accountants using the details given above. We respect your personal information and your privacy and will not share or sell your information to other organisations. Please read our Privacy Policy for more information.
  • This field is for validation purposes and should be left unchanged.