2022: What is the 2022/23 Personal Allowance?​

What is personal allowance?

Your Personal Allowance is the amount of money you can earn in a year before HMRC starts biting into it through the Income Tax system. It’s a really important piece of information, and it can change over time so it’s worth keeping an eye on it. Once your income goes over your Personal Allowance, you’ll start paying tax on everything above the threshold at the basic Income Tax rate of 20%.

You can find your Personal Allowance listed in your tax code. Your code will start with a string of numbers, followed by one or more letters. For example, the most common tax code for the 2022/23 tax year is 1257L. To work out the Personal Allowance you qualify for, you multiply the number at the start of your code by 10. Using the example of 1257L, this means that most UK taxpayers in 2022/23 can earn £12,570 before the taxman takes a penny of it.

What is the 2022/23 Personal Allowance rate?

With a Personal Allowance for 2022/23 of £12,570, any income up to that threshold is tax-free. After that, the tax you pay will depend on the tax bands your income falls into. Here are the Income Tax rates for 2022/23:

Band Taxable Income Tax Rate
Personal Allowance Up to £12,570 0%
Basic Rate £12,571 to £50,270 20%
Higher Rate £50,271 to £150,000 40%
Additional Rate Over £150,000 45%

Here's what it means in practice:

  • If your yearly income is £20,000, you’ll only pay Income Tax on £7,430 of it. This will be charged at the 20% basic rate.
  • If you make £55,000 a year, you’ll be paying tax on £42,430 of your income. After that, everything you earn up to £50,270 will be taxed at 20%. Finally, you’ll start paying the higher rate of 40% on the rest of your income.
  • If your yearly earnings come to £160,000, the Personal Allowance rules change. For every £2 you earn over £100,000 per year, your Personal Allowance drops by £1. In practice, that means by the time you’re earning at least £125,140, your Personal Allowance has dropped to £0. In this case, you pay 20% Income Tax for the first £50,270 you earn, followed by 40% until you hit £150,000, then 45% after that.

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How has the Personal Allowance changed since 2021/22?

The Personal Allowance for the 2021/22 tax year was £12,500. From the start of the 2022/23 tax year, the threshold was raised by £70 to £12,570. In real terms, this simply meant that most people could earn an extra £70 per year tax-free. To look at it another way, it put an extra £14 in people’s pockets a year.

What could I be due a tax rebate for?

There are quite a few reasons why you might be paying too much tax. Here are some of the main examples:

  • You might have been charged Emergency Tax because HMRC didn’t have all the information it needed to calculate your tax bill correctly.
  • You and your spouse or civil partner might not be making the best use of your Personal Allowances by claiming Marriage Allowance. This system allows one partner to transfer a portion of their unused Personal Allowance to the other, reducing their overall tax bill.
  • You might be on the wrong tax code and not getting the Personal Allowance you’re entitled to.
  • If you have more than one job, your Personal Allowance could have been applied to the wrong one, meaning you’re not getting the full benefit of it.
  • You might have business mileage or other essential work expenses you could claim a tax rebate for.

Talk to RIFT if you think you might be owed some tax back. We’re the UK leading experts in tax refunds, and we take all the stress, effort and guesswork out of claiming back what you’re owed.

Personal Allowance FAQs

Do I need to claim my personal allowance?

No, your Personal Allowance is automatically handled through the PAYE system (or through Self Assessment if you’re self-employed). If there’s a problem with your Personal Allowance, though, you might need to talk to HMRC or a tax specialist to get it fixed.

I'm self-employed with income below the Personal Allowance. Do I need to tell HMRC about my earnings?

Probably, but not always. If you’re earning under £1,000 a year from self-employment, for example, you don’t need to report your income to HMRC. However, if you’re earning over that you’ll need to file a yearly Self Assessment tax return – even if you don’t owe any tax!

I have more than one PAYE job. Do I still get a Personal Allowance?

Yes, but your Personal Allowance will usually only be applied to one of your jobs. Your second job will be taxed from the first penny you earn. If one of your jobs pays less than your Personal Allowance threshold, attaching your Personal Allowance to it means you won’t get the full benefit of it. If neither of your jobs pays more than your Personal Allowance, you may be able to get the allowance divided between them.

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