The UK Personal Allowance: how does it work?
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:
Annual self-employment income
£
Self-employment expenses
£
Select tax year
Income after tax
£37.9k
Income tax
£7.3k
NI
£3.8k
Total income tax
£7,300
£12,500 taxed at 0%
£36,500 taxed at 20% : £7,300
Total NI contributions
£3,789
Class 2 NI: £156
Class 4 NI at 9% : £3,633
What you’re left with
£37,911
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:
- You already made tax payments for the year but your annual income ended up smaller than planned
- 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:
Income tax breakdown
You pay no income tax on first £12,500 that you make
You pay £7,300 at basic income tax rate (20%) on the next £36,500
What can increase it
Depending on your situation you can add one (or both) of these allowances to it:
- the Marriage Allowance: your low-earning spouse can transfer 10% of their allowance to you
- blind people can also claim the Blind Person’s Allowance: an extra £2,450.