Personal Tax Allowance
Written in plain language for general understanding. This is educational content, not legal advice. Based on UK Acts of Parliament, statutory instruments, and official guidance.
What is this right?
Most people in the UK can earn a certain amount each year tax-free. This is called your Personal Allowance. For the 2024/25 tax year, it is £12,570.
After that, you pay income tax at these rates (England, Wales, and Northern Ireland):
- Basic rate (20%): £12,571 to £50,270
- Higher rate (40%): £50,271 to £125,140
- Additional rate (45%): over £125,140
If you earn over £100,000, your Personal Allowance is reduced by £1 for every £2 above that threshold — it reaches zero at £125,140.
Scotland has its own income tax rates and bands (set by the Scottish Parliament), with a starter rate of 19% and an additional top rate of 48%.
When does it apply?
- Applies to all UK taxpayers — whether employed, self-employed, or receiving a pension.
- Most employees have tax collected automatically through PAYE (Pay As You Earn) — your employer deducts it from your wages.
- You may be on the wrong tax code — check your payslip to make sure the code reflects your situation.
- Some income is tax-free beyond the Personal Allowance: the first £1,000 of savings interest (basic rate taxpayer), £500 for higher rate, and the first £1,000 of trading income.
What should you do?
- Check your tax code on your payslip — 1257L is the standard code for 2024/25. If yours is different, check that HMRC has correct information about your circumstances.
- If you think you've overpaid tax, contact HMRC or claim a refund online through your Personal Tax Account.
- Set up a Personal Tax Account at gov.uk — you can check your tax code, claim refunds, and see your National Insurance record.
- If you have multiple income sources, make sure HMRC knows so your tax code is split correctly.
What should you NOT do?
- Don't ignore an incorrect tax code — you could end up overpaying or underpaying tax for months. Check and correct it promptly.
- Don't assume your employer handles everything — if you have savings income, rental income, or other untaxed income over certain limits, you may need to file a tax return.
- Don't pay for a tax refund service unless you want to — you can claim refunds directly from HMRC for free.
How Northern Ireland differs from UK national law
Northern Ireland has no devolved income tax powers:
- Income tax rates and bands are exactly the same as England — the standard UK rates apply.
- Unlike Scotland (which sets its own rates) and Wales (which has the power to vary rates), NI income tax is set entirely by Westminster.
- Your tax code will be the standard format (e.g., 1257L) — no prefix like Scotland's "S" or Wales's "C".
The main tax difference in NI is domestic rates (instead of Council Tax), and Air Passenger Duty is devolved.
Additional Steps in Northern Ireland
- For property-related taxes, contact Land & Property Services NI at lpsni.gov.uk.
Relevant Law: Income Tax Act 2007 (UK-wide); Rates (Northern Ireland) Order 1977
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