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2.5 Personal allowance

Net income – PA = Taxable income

? Deduction sequence: 1) Non-savings income 2) Savings income 3) Dividends income

? Unused amount this year: wasted

Standard amount of £12,570 for the tax year

? PA is reduced by £1 for every £2 that individual’s adjusted net income (ANI) exceeds £100,000

? ANI = Net income - gross amounts of gift aid donations and gross amounts of personal pension contributions (see later)

? PA = 0 when ANI £125,140 (100,000+ 12,570 x 2 = 125,140)


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