For every £2 earned over £100,000, the Personal Allowance goes down by £1.
The Personal Allowance is the amount of income each individual is entitled to receive free of tax each year.
Find out more about the Personal Allowance on our accounting glossary.
Frances is a self-employed photographer who is completing her Self Assessment return for 2017/18. She needs to know two things in order to work out how much of her profit she has to pay Income Tax on:
Her taxable profit is:
£30,432 - £11,850 = £18,582 taxable profit
Frances will only pay Income Tax on £18,582 of her earnings.
Personal Allowance for people born after 6th April 1948
For managing your business it's the whole enchilada