The UK Personal Allowance: how does it work?

We've updated this guide on 29th July 2019

The Personal Allowance applies to all UK taxpayers. For the 2019/20 tax year it’s £12,500.

What can decrease your Personal Allowance

If you earn over £100,000:

  • it goes down by £1 for every £2 that your adjusted net income is above £100,000
  • this means that you lose this allowance entirely if your income is £125,000 or above.

However, you can reduce your adjusted net income by paying into private pensions and charity donations.

How much do I get?

Use this income tax calculator:

Your annual income
£
Business expenses
£
Select tax year
Income after tax
£37.9k
Income tax
£7.3k
NI
£3.8k
Total income tax
£7,300.00
£12,500.00 taxed at 0%
£36,500.00 taxed at 20% : £7,300.00
Total NI contributions
£3,789.24
Class 2 NI: £156.00
Class 4 NI at 9% : £3,633.24
What you’re left with
£37,910.76

How your income tax is calculated

As a self-employed you have to pay your income tax and national insurance contributions yourself during your annual self assessment. Our calculator helps you quickly assess how much payment is due.

However you may be eligible for a tax refund when:

  1. You already made tax payments for the year but your annual income ended up smaller than planned
  2. You have done things that qualify for tax relief (made private pension contributions, give to charity, etc)

In your case when you earn £49,000.00:

Income tax breakdown

You pay no income tax on first £12,500.00 that you make

You pay £7,300.00 at basic income tax rate (20%) on the next £36,500.00

What can increase it

Depending on your situation you can add one (or both) of these allowances to it:

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Who our service is for

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