What is the Personal Allowance?
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.
Example: How Frances uses her Personal Allowance to calculate her taxable profit
Frances is a self-employed photographer who is completing her Self Assessment return for 2020/21. She needs to know two things in order to work out how much of her profit she has to pay Income Tax on:
- Her total profit for the year: £30,432
- The Personal Allowance: £12,500
Her taxable profit is:
£30,432 - £12,500 = £17,937 taxable profit
Frances will only pay Income Tax on £17,937 of her earnings.
Previous Personal Allowance
Personal Allowance for people born after 6th April 1948
Previous income limits