As a financial expert with a keen eye on tax regulations, I am well-versed in the intricacies of tax allowances and their evolution over the years. Tax allowances are a critical aspect of the fiscal system, providing relief to taxpayers and shaping the economic landscape in significant ways.

In the United Kingdom, the tax year 2017 to 2018 was marked by several changes to the tax allowances, which I will discuss in detail. The personal allowance, which is the amount of income that an individual can earn before they start paying income tax, was indeed increased for the tax year 2017 to 2018. This increase was part of a broader policy to reduce the tax burden on lower and middle-income earners.

The personal allowance for the tax year 2017 to 2018 was set at £11,500. This was an increase from the previous year's allowance, which was £11,000. This means that individuals could earn up to £11,500 without paying any income tax, provided they did not have any other taxable income or benefits.

In addition to the personal allowance, there is also the basic rate limit, which determines the income threshold at which an individual's tax rate switches from the basic rate to the higher rate. For the tax year 2017 to 2018, the basic rate limit was increased to £33,500. This means that any income between the personal allowance and the basic rate limit was taxed at the basic rate, which was 20% at that time.

The higher rate threshold, which is the point at which the tax rate increases to the higher rate, was consequently set at £45,000 for the tax year 2017 to 2018. This was calculated by adding the personal allowance to the basic rate limit. Therefore, any income above £45,000 was taxed at the higher rate, which was 40% at that time.

It is important to note that these allowances and thresholds are subject to individual circumstances and may be affected by other factors such as dividends, savings, and pension contributions. Additionally, the tax system is complex and can change from year to year, with different rates and allowances applying depending on various factors.

In conclusion, the tax allowances for the tax year 2017 to 2018 in the UK provided a significant amount of income that was free from tax for the average earner, with the personal allowance and basic rate limit being key components of the tax-free income bracket. Understanding these allowances is crucial for taxpayers to effectively plan their finances and maximize their tax efficiency.

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This measure increases the personal allowance to --11,500 for 2017 to 2018. The basic rate limit will be increased to --33,500 for 2017 to 2018. As a result, the higher rate threshold will be --45,000 in 2017 to 2018.read more >>