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Tax free allowance for 2014 - 2015

Now that the festive season is well and truly behind us, some of us are considering our personal finances for the coming year or so. Depending on your tax band, working out whether you fall into the category of qualifying for a tax free allowance for 2014 to 2015 is one important consideration.

What do HM Revenue and Customs (HMRC) say about this?

HMRC state that any tax free allowance 2014 2015 will depend on certain criteria. Those likely to be affected are income tax payers, employers and pension providers.

The coalition government has introduced a policy objective to support those citizens who are at the low or middle income parts of the employment scale. Behind this is their frequently delivered mantra of rewarding those of us who work. To this end the first £10,000 of anyone's income will remain exempt from tax.

In 2014-15 there will be an alteration to the basic rate limit. One of the driving forces behind this was the Chancellor's pronouncement in his 2012 Autumn statement that the higher rate threshold two years' hence would be increased by one percent.

Tax Rates

This is how the basic rates have reduced. During the 2012-13 tax year, those on the basic rate of 20% fell into the £0 to £34,370 bracket. This has fallen to £0 to £31,865.

During the 2012-13 tax year, those on the higher rate of 40% fell into the £34,371 to £150,000 bracket. This has fallen to £0 to £31,865.

Finally, for those on the additional rate (45%), the band has remainde constant at over £150,000.

In establishing the figures for the tax free allowance for 2014 2015, the Chancellor, George Osborne, promised to introduce and uprating mechanism. The purpose of this was to to ensure transferable tax allowance kept on a par with the personal allowance. This policy is following on from his plans to introduce a transferable tax allowance for married couples. This is projected to take place from April 2015.

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