Claiming the personal allowance

In this post  we're going to discuss claiming the personal allowance. What's more, we'll discuss who qualifies and when disclaiming the personal allowance may be appropriate.

Claiming the personal allowance

Claiming the personal allowance - who qualifies?

The personal allowance (currently £12,570) is available to anyone who falls within the following categories.

  • UK resident for a tax year or at any time in the tax year.
  • Is a British citizen or a national of another member state of the European Economic Area (EEA); 
  • Is a resident in the Isle of Man or the Channel Islands.
  • Has previously resided in the UK but lives abroad for the sake of their own health or that of a member of their family who is resident with them.
  •  Someone who is or has been employed in the service of the Crown.  
  • A person employed in the service of any territory under His Majesty’s protection.
  • Is employed in the service of a missionary society.
  • An individual whose late spouse/civil partner was employed in the service of the Crown.

What about non-UK residents?

If you are a UK national you can claim UK Personal Allowances, regardless of  whether you are UK tax resident. 

However, from 6 April 2010, UK tax allowances are not available solely on the grounds of being a Commonwealth citizen. Although, if you are a national of the countries listed here and non-UK tax resident, you may claim UK personal allowances.

Claiming the personal allowance as a non-UK resident

Essentially there are  two methods of claiming the personal allowance if you are a non-UK resident.

  • Firstly, register for UK Self Assessment and complete the relevant section of the supplementary pages for residences with your tax return.
  • Alternatively, if you are not within UK Self Assessment complete the form R43

You can claim the Transferable Marriage Allowance if both spouses are entitled to a personal allowance. What's more, this is regardless of whether you live abroad or in the UK. Therefore, you just need to meet the qualifying conditions.

Disclaiming the personal allowance

The personal allowances is given automatically to those qualifying, without any claim being required. However, there are some exceptions to this rule.

When would you want to disclaim the personal allowance?

You may want to disclaim your personal allowance to claim Income Tax relief on a Seed Enterprise Investment Scheme (SEIS) investment. This would be where your income would otherwise be entirely covered by your personal allowance.

Most importantly this will enable your SEIS investment to qualify for Capital Gains Tax relief when the shares are sold. Moreover gains on the disposal of qualifying SEIS shares, after three years, are CGT exempt. This is provided that Income Tax relief was given on the original investment.

However. where Income Tax relief was not given on the entire SEIS subscription, the CGT exemption is restricted pro-rata. The only exception being where full Income Tax relief was not available because your Income Tax liability was too low.

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