Income tax allowances and bands

Please note it is taxable income which applies in this assessment, including earnings, pensions in payment, cash interest, fixed interest income, dividends and rent. ISA income is not included.

Income tax – main personal allowances

Allowance	2021/22
Personal Allowance	£12,570
Transferable tax allowance for married couples/civil partners	£1,260
Personal Savings Allowance (PSA)	£1,000 for Basic rate taxpayers £500 for Higher rate taxpayers Not available for Additional rate taxpayers
Dividend Allowance	£2,000

A Married Couple’s allowance (born pre 6/4/35) or Blind Person’s allowance may also apply.

The transferrable tax allowance only applies where neither individual is a higher or additional rate tax payer. The maximum tax reduction available is £252.

The personal allowance reduces by £1 for every £2 of income above £100,000. The personal allowance is lost if taxable income exceeds £125,140 (2021/22).

The dividend and personal savings allowance apply after the personal allowance and are calculated using UK, not Scottish, rates. Anything within these allowances still count towards the basic and/or higher rate tax bands.