People do not have to pay income tax on all their income. Everyone gets a tax allowance which allows them to have some income they do not have to pay tax on. However, the amount varies depending on personal circumstances.

What you can earn before paying income tax on earned or investment income. Single people have an allowance of £4,195 during the 1998/99 tax year. Married couples, people with dependent children, and people aged 65 or more qualify for additional allowances.

Everyone is entitled to receive an amount of income before being liable to tax. For 1999/2000, the personal allowance is £4,335. For 2000/2001 is it £4,385.

a tax exempt amount of income that you are entitled to in each tax year

Tax allowances are concessions by the Inland Revenue which can be used to reduce a person's Taxable Income. The main allowance for UK taxpayers is the 'personal allowance'; which is an amount of income that is tax free. In the tax year 2005-2006 the personal allowances are: Under 65: £4,895 65-74: £7,090 75+: £7,220 The personal allowances for elderly people are reduced if their total income exceeds £19,500, and the amount of the reduction if £1 for every £2 of the excess. So someone aged 68 with a Total Income of £19,800 would get a personal allowance of £7,090 less £300 = £6,790.

Amount of income earned before it becomes susceptible to income tax. Amounts are different for all ages and status of marriage.

In the 2006/07 tax year the first £5035 of income is tax-free.

In the fiscal year 1998/99, this comes to #4,195. The first #4,195 of an individual’s income is covered by the personal allowance and is not liable to income tax.

The level of income above which income tax starts to be levied.

UK residents receive the first portion of their income free from tax. This is known as their personal allowance.