Income Tax Reliefs

Main Income Tax Allowances

A personal allowance gives an individual an annual amount of income free from income tax,

Income above the personal allowances is subject to income tax.

The personal allowances will be reduced if an individual’s adjusted net income (income after deduction of trading losses, donations made to charities through Gift Aid and pension contributions) is above £100,000. The allowance is reduced by £1 for every £2 of income above £100,000.

An individual born before 6 April 1948 may be entitled to an age allowance income limit (see table below).

Main Income Tax Allowances 2016/2017 2015/2016
Personal allowance* £11,000 £10,660
Age-related allowance
Personal allowance
Born on or before 5 April 1938 £11,000 £10,660
6 April 1938 to 5 April 1948 £11,000 £10,660
Married couple**
(either spouse born on or before 5 April 1935) £11,000 £10,660
– minimum amount £3,220 £3,220
Income Limit £27,700 £27,700
Clawback £1 in £2 £1 in £2
Blind person’s allowance £2,290 £2,290
Maintenance payments* (born before 5/4/35) £2,350 £2,350
 * Reduced by £1 for £2 where income exceed £100,000
** Denotes allowance given as a 10% credit

Important Limits 2016/2017 2015/2016
Charitable donations under payroll giving scheme no limit no limit
Golden handshake exemption  £30,000  £30,000
Venture capital trusts** (VCT)  £200,000  £200,000
Gift aid – minimum no minimum no minimum
Rent a room exemption £4,250 £4,250
Enterprise Investment scheme* (EIS)  £500,000  £500,000
Enterprise Management Incentive Investment (EMI) £250,000 £250,000
Seed Enterprise Investment Scheme (SEIS) *** £100,000 £100,000
*Relief restricted to 20%
** Relief restricted to 30% – must now be held for 5 years
*** Relief entitlement upto 50% must have less than 50% stake in business