Utilising Available Allowances

With the end of the tax year approaching now is a key time for tax payers to ensure that they have utilised all the allowances available to them before these are lost.

The present tax year runs from 6 April 2020 to 5 April 2021.

The allowances available for an individual this tax year are as follows:

  • Personal allowance – this is the amount an individual can earn before paying income tax. The amount for 2020/21 is £12,500. Please note if your earnings are over £100,000 the personal allowance is reduced by £1 for every £2 of income over £100,000.
  • Basic rate band – from £0 - £37,500 of income in excess of the personal allowance (if applicable) is taxable at basic rate. Basic rates of tax for income and savings is set at 20% and for dividends is 7.5%.
  • Higher rate band – from £37,501 to £150,000 of income in excess of the basic rate band is taxable at higher rate. Higher rates of tax for income and savings is 40% and for dividends is 32.5%.
  • Dividend allowance – all individuals in the UK are entitled to receive £2,000 of dividends tax free, regardless of their other income
  • Savings allowance – this is an allowance against bank and other interest receivable. The rates are £1,000 for a basic rate tax payer and £500 for a higher rate tax payer. There is no savings allowance for an additional rate tax payer (earnings of over £150,000).
  • Trade allowance – a flat allowance of £1,000 for all trading income such as selling on Amazon. If income exceeds £1,000 then you can elect to deduct the allowance rather than the relevant expenses.
  • Property allowance – works in the same way as the trade allowance but for rental income received.
  • Pension annual allowance – This is up to £40,000 of gross pension contributions. Please note that if relevant earnings exceed £240,000 then the allowance is reduced £1 for every £2 over £240,000 to a minimum of £4,000.
  • Capital gains tax annual exemption – for the sale of capital items such as investment properties or shares. The annual exemption is £12,300.


To discuss any of the available allowances or for advise on how to utilise the above allowances please contact your local Perrys branch.

We use cookies to help provide you with the best possible online experience. By accepting, you agree that we may store and access cookies on your device.