House of Commons Library

Age-related personal allowance

Published Tuesday, September 10, 2019

All taxpayers are entitled to receive a personal allowance to set against their income for tax purposes. Individuals aged 65 and over have been entitled to receive an additional allowance; an extra addition has been made for those age 75 and over. This note gives details of the allowance and the Coalition Government's decision, first announced in Budget 2012, to phase it out from 2013/14.

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In May 2010, the new Coalition Government announced that as part of its first Budget it would introduce a substantial increase in the personal allowance, as the first step to setting the allowance at £10,000.[1] The allowance was set at £6,475 for 2010/11, and in his Budget speech on 22 June 2010, the Chancellor, Mr Osborne, announced that it would rise to £7,475 from April 2011, and confirmed that the Government would continue to increase the allowance “during the rest of this Parliament.”[2] Subsequently the allowance was increased each year to reach £10,000 for 2014/15.[3]

Prior to 2013/14, individuals were entitled to claim one of two age-related additions to the personal allowance, if they were 65 years of age or older.  In his 2012 Budget the Chancellor, George Osborne, announced that from April 2013 these two allowances would be phased out: each allowance would be frozen in cash terms, until they became aligned with the ‘basic’ personal allowance. In addition, only existing recipients would be entitled to claim either allowance.[4] From April 2013 the first of these allowances, fixed at £10,500, was restricted to people born after 5 April 1938 but before 6 April 1948. The second allowance, fixed at £10,660, was restricted to people born before 6 April 1938.

In the Conservative Government’s first Budget after the 2015 General Election, the then Chancellor George Osborne pledged to increase the personal allowance to £12,500 by the end of the Parliament. As a first step, the allowance would be increased by £400 to £11,000 for 2016/17.[5]  With this increase in the personal allowance, both age-related allowances were withdrawn so that since then taxpayers that were claiming these allowances are now eligible for the ‘basic’ personal allowance.[6]

Notes : 

[1]    HMG, The Coalition: our programme for government, 20 May 2010 p30

[2]    HC Deb 22 June 2010 c179

[3]    HC Deb 20 March 2013 c944. For more details see, Income tax : increases in the personal allowance since 2010, Commons Briefing paper CBP6569, 15 November 2018.

[4]    HC Deb 21 March 2012 c801

[5]    HC Deb 8 July 2015 c336; Summer Budget 2015, HC246, July 2015 paras 1.130-4

[6]    Tax rates and allowances for 2019/20 are in HMT, Overview of Tax Legislation and Rates, October 2018 (Annex A); & Low Incomes Tax Reform Group, What tax allowances am I entitled to?, September 2019.

Commons Briefing papers SN06158

Authors: Antony Seely; Matthew Keep

Topic: Taxation

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