Claiming the personal allowance

In this post  we're going to discuss claiming the personal allowance. We'll discuss who qualifies and the circumstances where 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 are entitled to 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. However if you are a national of the countries listed here in HMRC's manuals here and non-UK tax resident. You may also be entitled to 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.

  • Register for UK Self Assessment and complete the relevant section of the supplementary pages for residences with your tax return.
  • If you are not within UK Self Assessment complete the form R43

You can also claim the Transferable Marriage Allowance if both spouses are entitled to a personal allowance, regardless of whether you live abroad or in the UK, as long as you meet the qualifying conditions

Disclaiming the personal allowance

In practice, the personal allowances is usually given automatically to those who qualify, without a claim being required. However there are some exceptions ton this rule.

When would you want to disclaim the personal allowance?

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

This will allow your SEIS investment to qualify for Capital Gains Tax (CGT) disposal relief when the shares are sold. Gains on the disposal of qualifying SEIS shares, after three years, are exempt from CGT 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, unless full Income Tax relief was not available simply because your Income Tax liability was too low.

For more useful information, check out our Ebooks here.

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