UK Tax Questions? Ask a UK Tax Advisor for answers ASAP
Hi.The personal tax allowance is not used as a straight deduction from the tax liability as you appear to have used it. The tax is calculated after the personal allowance of £7,475 for 2011/12 or £8,105 for 2012/13 is deducted from your income.The tax allowance of £7,475 for 2011/12 is worth £1,495 in tax terms for a 20% taxpayer and £2,990 for a 40% taxpayer with an income of £100,000 or less.The tax allowance of £8,105 for 2012/13 is worth £1,621 in tax terms for a 20% taxpayer and £3,242 for a 40% taxpayer with an income of £100,000 or less.So, for example, if you had an income of £15,000 for 2012/13 you would deduct the personal allowance of £8,105 from it to leave £6,895 taxable. Tax on that at 20% would be £1,379.I hope this helps but let me know if you have any further questions.