The personal allowance is a deduction against net income that is available to all UK resident individuals (and some non-residents, see below). The basic personal allowance for 2019/20 is £12,500 (£11,850 for 2018/19).

Where an individual’s net income exceeds £100,000, his personal allowance is reduced by £1 for every £2 of income above £100,000. ITA 2007, s 35(2)–(4)

A husband and wife / civil partners are treated as separate persons and so each is entitled to a personal allowance to set against their own personal income. Where one spouse / civil partner is working and the other is not, both personal allowances can be utilised by the transfer of income-producing assets to the non-worker. See the Utilising allowances and lower rate bands guidance note for more details.

From 6 April 2015, an individual is able to ‘transfer’ 10% of his personal allowance (£1,250 for 2019/20; £1,190 for 2018/19) to his spouse / civil partner, who receives a tax reduction of 20% of this amount. In order to make the transfer, both parties must not be higher rate or additional rate taxpayers. See the Transferable tax allowance guidance note. ITA 2007, ss 55A–55E

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