Personal Allowance

The Personal Allowance is the amount of tax-free income that everyone in the UK is entitled to receive each year. The Personal Allowance currently stands at £12,570. You will only be taxed on anything that you earn beyond this amount.

However, if you earn over £100,000 per annum, your Personal Allowance is reduced by £1 for every £2 you earn above the £100,000 threshold. To that end, once your income reaches £125,140, you lose your Personal Allowance completely.

Frequently Asked Questions

  • Do I have to pay Income Tax on tips?

    If you earn £2500 from other untaxed income, such as tips or renting a property, you will need to register and file a Self Assessment tax return.

  • Are there any ways to increase my Personal Allowance?

    Yes! You can increase your Personal Allowance and make your earnings more tax-efficient by means such as the Marriage Allowance, whereby the lower earning partner can transfer a part of their Personal Allowance to their partner. There is a limit of £1,260 per year, but this is called a tax credit and is perfectly legal and can result in your partner being liable for a lower rate of tax!

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