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A Personal Allowance is the chunk of your yearly income that doesn’t get hit with Income Tax. It’s worth keeping track of your Personal Allowance, because it can sometimes change and make a difference to the amount of money you bring home in a year. From the first pound you earn over your Personal Allowance limit, you’ll start paying Income Tax. At first, this will cost you 20% of what you make over the allowance threshold, but that rate goes up for people with higher earnings.
The Personal Allowance you qualify for is listed in your job’s tax code, which you’ll find on your payslips. For example, most people in the 2023/24 tax year will have a tax code of 1257L. To work out your Personal Allowance from your tax code, multiply the number at the start by 10. In 2023/24, most people paying Income Tax in the UK have a Personal Allowance of £12,570, and will only be charged tax once their income goes over that.
The Personal Allowance for 2023/24 is £12,570, so earnings up to that limit are free of Income Tax. Once you earn enough to pay tax, the amount you pay varies according to the tax brackets you fall into. Here are the main tax rates for 2023/24:
| Band | Taxable Income | Tax Rate |
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 to £50,270 | 20% |
| Higher Rate | £50,271 to £150,000 | 40% |
| Additional Rate | Over £150,000 | 45% |
Here's what it means in practice:
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In the November 2022 Autumn Statement, the Personal Allowance threshold was frozen for an extra 2 years beyond the previous planned date of 2026. This means it hasn’t changed at all since the 2022/23 tax year, and isn’t expected to change again until at least 2028.
People end up paying more tax than they should for all sorts of reasons. Here are a few of the big ones:
Talk to RIFT if you think you might be owed some tax back. We’re the UK leading experts in tax refunds, and we take all the stress, effort and guesswork out of claiming back what you’re owed.
Your Personal Allowance is dealt with automatically, whether you work for an employer or are self-employed. The only time you need to kick up a fuss about it is if there’s a problem with it.
Not necessarily. There’s a “trading allowance” of £1,000 for self-employment income. If you’re making less than that in a year, HMRC won’t expect you to report it to them. However, earning over £1,000 will still mean you have to use the Self Assessment system to report your income, even if you’re not earning enough to pay tax.
Yes, but watch out – Personal Allowances are usually only attached to your “main” job. Your other job will be taxed on the whole amount it brings in. If your income from your main job is less than your Personal Allowance, this can mean you’re not getting the full benefit. If neither of your jobs brings in more than your Personal Allowance on its own, you may be able to get your allowance divided between them so you don’t miss out.
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