If you find it hard to keep up to date with the Election and politics and all the changes that are made every time the new Budget is announced, then you may not be aware of the amount that you can earn before being taxed.
The last budget was in March of this year and there were a number of changes that were made which will affect people in a number of different ways. Now, one common question we get asked here at K A Farr & Co is about the tax free allowance.
What is the Tax Free Allowance?
Now, going back to the budget, if it’s something that you’re not overly interested in, you won’t know the answer to this question well, that’s why we’re here.
The amount anyone can earn in the UK, if they qualify for it, each financial year and pay absolutely zero tax on is £10,600 (2015/16). This is called a tax-free personal allowance and it may be bigger if you were born before April 6th, 1938 or if you get Blind Person’s Allowance.
Income Tax Rates
There are a number of different income tax rates depending on what you earn each year. The basic rate of income tax is 20% for people who earn from £0 to £31,785 per year (for 2015/16). If you have the standard personal allowance, you will start paying this rate on any income earned over £10,600 (the tax-free threshold).
The higher rate of 40% is paid for those who earn £31,786 to £150,000. As with the basic rate of 20%, if you have the standard personal allowance, you will only start paying this rate when you have earner over £42,385.
The highest rate of tax that you could possibly pay is 45% and is known as the additional rate and is paid by anyone who earns over £150,000 per annum.
Would you like to speak to someone here at K A Farr & Co about how we can help you with your taxes? Give us a call on 01704 211434 and a member of the team will gladly go through any questions you may have with you. Alternatively, you can email the office on firstname.lastname@example.org and we’ll be back in touch within 5 working days.