The personal allowance is set by the UK government each year.  The personal allowance relates to one tax year (6 April to 5 April each year).  It changes each year and is announced during the Autumn Budget.

What is the Personal Allowance?

The Personal Allowance in the UK is currently (2018/2019) £11,850.

The Personal Allowance you are entitled to may be bigger if you claim Marriage Allowance or Blind Person’s Allowance.

You should also watch out if your income is over £100,000 as your Personal Allowance will be reduced.


What Happens If You Earn More Than £100,000

The Personal Allowance is reduced by £1 for every £2 of your income over £100,000.

So if you earn more than £123,000 in the tax year 2018/2019 you will lose all the Personal Allowance.

How do I Claim the Personal Allowance?

If you are employed by someone you will receive your personal allowance entitlement as part of working out tax due on your gross salary.

If you are self employed you can claim for the Personal Allowance as part of completing your Self Assessment Tax Return Form.

What Happens if I Earn More than the Personal Allowance?

You pay income tax on earnings above your Personal Allowance.  The amount of income tax you pay is worked out by different bands.

The income tax bands for 2018/2019 are as follows:

Band Taxable income Tax rate
Personal Allowance Up to £11,850 0%
Basic rate £11,851 to £46,350 20%
Higher rate £46,351 to £150,000 40%
Additional rate over £150,000 45%
An Example of Using the Personal Allowance
Carlos earns £30,000 for the tax year 2018/2019.  He will pay tax of £3,630 and this is worked out as follows:
On the first £11,850 0% = £0
On the next £18,150 20% = £3,630