Personal Allowance
The income you can earn each tax year before paying any income tax.
For 2024/25 the standard personal allowance is £12,570, frozen until 2028 under current policy. Above this you pay 20% (basic rate) up to £50,270, 40% (higher rate) up to £125,140, and 45% (additional rate) above. The allowance is tapered away by £1 for every £2 of adjusted net income over £100,000, so you lose it entirely once income hits £125,140, which creates the well-known 60% marginal rate band. Married couples can boost things via Marriage Allowance, and pension contributions reduce adjusted net income, which can claw the allowance back. HMRC sets and publishes the figures each year.
A 60-second lesson that puts this term in context, alongside the others, lives inside the Finlo app.