These are concessions from the Inland Revenue which can be used to reduce your taxable income. Your Personal allowance is an amount of income that is tax free. Personal allowances for 2005 - 2006: under 65yrs - £4,895, 65yrs-74yrs - £7,090, 75yrs+ - £7,220

These are tax-free amounts set by the government every year. Normally they are given to UK & commonwealth citizens, but are also available to others who qualify under specific rules. The basic and most common is the Personal Allowance - it is available to everyone resident in the United Kingdom for tax purposes.

Allowances are standard tax-free amounts set by the government every year. They are given to all UK & commonwealth citizens and others who qualify under specific criteria. The most common is the Personal Allowance. This is given to everyone resident in the United Kingdom for tax purposes. Other main allowances previously included Married Couples' Allowance, but since 6th April 2000 married allowance has been restricted to those over 65 at that date. Allowances for children have now been abolished but were available up to 5th April 2003 for children born after 6th April 1985.

When you earn income from a job, some of your wages are held back for taxes. You control how much is withheld by filing a W-4 form, indicating the number of "allowances" you want to claim. An allowance is a way of "exempting" part of your income from tax withholding. The more allowances you claim, the less tax your employer will withhold.

Any item that can be deducted from gross salary to help reduce the amount of tax you pay is called an ‘Allowanceâ€(tm). These can include your Personal Allowance – the amount you can earn before you pay any income tax – or other legitimate business expenditure that a self-employed person can use to reduce their gross income. These might include: Petrol and other associated car costs (assuming the car is used for your business) Phone bills Office bills (heating, electricity etc) Other business-related expenses (parking, travel costs etc)