What the Personal Allowance is
The Personal Allowance is the income each individual is entitled to receive tax-free each year.
The standard Personal Allowance for the tax year 2023/24 is £12,570. If you earn less than this, you usually won’t have to pay any income tax.
It’s the same as the previous 2022/23 tax year with the government currently planning to keep the same personal allowance of £12,570 until April 2026.
The value may be bigger if you claim a Marriage Allowance or a Blind Person’s Allowance, depending on your individual situation. Your personal allowance will also be reduced if your income is over £100,000 or if you owe tax from a previous tax year.
Your Personal Allowance within the tax bands
Below are the current Income Tax rates and bands if you have a standard personal allowance:
Personal allowance – up to £12,570 at 0% tax rate
Basic rate – £12,571 to £50,270 at 20% tax rate
Higher rate – £50,271 to £125,140 at 40% tax rate
Additional rate – over £125,140 at 45% tax rate
Your personal allowance reduces by £1 for every £2 that your adjusted net income [Link to glossary term] is above £100,000. So your allowance would be zero if your income is £125,140 or greater.
Find out more information here.
How the Personal allowance is applied
Your personal allowance is applied in different ways depending on how you receive your income.
If you're self-employed and this is your only income, you need to take your allowance off your profit and then work out how much Income Tax you’re due to pay when you file your end-of-year Self Assessment return.
If you're a salaried employee, your personal allowance is taken off your earnings before your employer works out how much Income Tax to deduct from your wages.