Personal Tax Allowance 2023/24 – What You Need to Know

The UK personal tax allowance for the 2023/24 tax year stands at £12,570, representing the amount individuals can earn before paying income tax. This figure has remained unchanged since the 2021/22 tax year, when the government froze the allowance as part of its fiscal strategy. Understanding how personal allowances work, including the taper mechanism for higher earners and regional variations in tax bands, is essential for anyone seeking to manage their tax liability effectively.

For the 2024/25 and 2025/26 tax years, the personal allowance remains frozen at the same level according to official government publications. The allowance applies to earned income, pensions, and most other sources of taxable income, though specific rules govern how it interacts with benefits, savings, and dividend income. Individuals whose income exceeds £100,000 face a progressive reduction in their allowance, which can significantly affect their overall tax position.

What is the personal tax allowance for 2023/24?

The standard personal tax allowance for the 2023/24 tax year, which runs from 6 April 2023 to 5 April 2024, is £12,570. This amount represents the tax-free income threshold that applies to most UK taxpayers. According to HM Revenue and Customs guidance, the allowance has been frozen at this level since the 2021/22 tax year, when it was last increased from £12,500.

• The personal tax allowance has remained frozen at £12,570 since the 2021/22 tax year
• Earners above £100,000 see their allowance reduced by £1 for every £2 of excess income
• The allowance is completely eliminated once income reaches £125,140 or above
• The £100,000 threshold for taper has been in place since the 2017/18 tax year
• Scotland operates separate tax bands while sharing the same personal allowance figure
• The allowance applies to the 2023/24 tax year covering 6 April 2023 to 5 April 2024

What are the UK income tax rates for 2023/24?

Income tax rates in the UK vary depending on which region you reside in, with Scotland maintaining its own distinct tax structure separate from England, Wales, and Northern Ireland. Despite these regional differences, all parts of the UK share the same personal allowance of £12,570 at the 0% rate. The way income is then taxed above this threshold differs substantially between jurisdictions.

England, Wales, and Northern Ireland

For residents of England, Wales, and Northern Ireland, the tax bands for 2023/24 and 2024/25 operate as follows. The basic rate of 20% applies to taxable income between £12,571 and £50,270. Income falling between £50,271 and £125,140 is taxed at the higher rate of 40%, while any earnings above £125,140 attract the additional rate of 45%. These bands represent taxable income after deducting the personal allowance.

Scotland

Scotland applies a more granular band structure with additional intermediate rates. The starter rate of 19% applies to income between £12,571 and £15,397, followed by the basic rate of 20% for income from £15,398 to £27,491. An intermediate rate of 21% covers earnings between £27,492 and £43,662, with the higher rate of 42% applying from £43,663 to £75,000. An advanced rate of 45% covers £75,001 to £125,140, and the top rate of 48% applies to all income exceeding £125,140.

Dividend taxation

Dividend income receives its own treatment within the UK tax system. The dividend allowance provides the first £500 of dividend income at a 0% tax rate, a figure that has been reduced significantly from previous years when it stood at £2,000. However, this allowance does not apply to dividends from shares held within an Individual Savings Account. Dividend income within the allowance still counts toward basic and higher rate limits for income tax purposes. The actual tax rates on dividends above the allowance are 8.75% at the basic rate, 33.75% at the higher rate, and 39.35% at the additional rate.

Is the personal tax allowance going up?

The personal tax allowance has not increased since the 2021/22 tax year, when it reached £12,570. The government announced a freeze on the personal allowance as part of its fiscal consolidation measures, meaning the £12,570 figure has remained constant across the 2022/23, 2023/24, 2024/25, and 2025/26 tax years. This freeze is scheduled to continue through at least 2025/26 according to current government announcements.

Prior to the freeze, the personal allowance had been increased incrementally each year. In the 2020/21 tax year, the allowance stood at £12,500, having risen from £12,300 in 2019/20. The allowance had previously increased more substantially as part of the government’s commitment to raise the threshold to £12,500. The income limit for the taper mechanism was also changed over time, moving from £27,700 in the 2015/16 tax year to £100,000 from 2017/18 onwards.

What is the personal tax allowance for 2024/25 and beyond?

For the 2024/25 tax year, which began on 6 April 2024 and ends on 5 April 2025, the personal tax allowance remains at £12,570. This confirms the continuation of the freeze that began in 2021/22. The same figure applies to the 2025/26 tax year according to published government rates and allowances. Taxpayers should note that while the personal allowance itself is frozen, other elements of the tax system may change, including the bands at which different rates apply.

The basic rate band for England, Wales, and Northern Ireland has been set at £50,270 for 2024/25, meaning the 20% basic rate applies to taxable income up to this threshold after the personal allowance is deducted. The higher rate threshold stands at £125,140, and the additional rate of 45% applies to income above this amount. These figures remain aligned with the personal allowance position where the taper completes.

Other allowances and their future

Beyond the standard personal allowance, other tax allowances have seen modest increases. The Married Couple’s Allowance, which is available to couples where at least one partner was born before 6 April 1935, has increased to £11,080 for 2024/25 and £11,270 for 2025/26, up from £10,375 in 2023/24. The Blind Person’s Allowance stands at £3,070 for 2024/25 and £3,130 for 2025/26.

Those receiving the State Pension should be aware of how their personal allowance interacts with their retirement income. The State Pension Age Guide provides context on when individuals become eligible for State Pension, which can affect their overall tax position. Self-employed individuals claiming Universal Credit should also review the Universal Credit Self-Employed Rules to understand how trading income affects their benefit entitlement.

How the income taper works for high earners

The personal allowance taper mechanism affects individuals whose income exceeds £100,000 in a given tax year. For every £2 of income above this threshold, the personal allowance is reduced by £1. This means that someone earning £110,000 would lose £5,000 of their allowance, bringing it down to £7,570. The taper continues until the allowance reaches zero, which occurs when income reaches £125,140.

Once income exceeds £125,140, the individual receives no personal allowance and pays tax on all their income. At this point, their entire income falls within the taxable bands, with income between £125,140 and the higher rate threshold no longer existing as it would in a standard calculation. The effective marginal tax rate for someone going through the taper zone can be higher than the standard rates because the loss of allowance effectively adds an additional 20% to the tax rate on the income within the taper range.

Timeline of personal allowance changes

The personal allowance has undergone significant changes over the past decade, transitioning from a period of regular increases to the current freeze. Understanding this historical trajectory helps contextualise the current position and future expectations.

1. 2019/20: Personal allowance set at £12,500 with taper starting at £100,000
2. 2020/21: Allowance increased to £12,500, maintaining the same taper threshold
3. 2021/22: Allowance raised to £12,570 and frozen, marking the end of annual increases
4. 2022/23: Freeze continues at £12,570
5. 2023/24: Allowance remains frozen at £12,570
6. 2024/25: Confirmed freeze maintained at £12,570
7. 2025/26: Projected to remain frozen at £12,570 per government announcements

What is confirmed and what remains uncertain

Several aspects of the personal tax allowance system are firmly established based on official government publications, while others remain subject to change depending on future fiscal decisions.

Historical context of the personal allowance

The personal allowance system has evolved considerably over the past two decades. Prior to the introduction of the income tax taper in 2010, the personal allowance was reduced at a rate of £1 for every £2 of income above £100,000, which was subsequently modified to the current structure. The allowance has historically been subject to political decisions regarding the balance between taxation and personal earnings retention.

The decision to freeze the personal allowance at £12,570 was made as part of the government’s broader fiscal strategy to raise revenue without explicitly increasing tax rates. This approach has attracted both criticism and support, with proponents arguing it helps fund public services while opponents suggest it amounts to a stealth tax increase as wages rise in nominal terms.

Sources and official references

Official information on personal tax allowances comes primarily from HM Revenue and Customs and the UK government. The following sources provide authoritative guidance on current and historical tax rates.

“The standard Personal Allowance is £12,570, which is the amount of income you do not have to pay tax on. Your Personal Allowance may be bigger if you claim Blind Person’s Allowance. It is smaller if your income is over £100,000.”

— Gov.uk, Income Tax Rates

Key sources for this information include the official Gov.uk income tax rates page, which provides current rates and guidance. The government publication of income tax rates and allowances contains historical data and current year information. Parliamentary research, including the House of Commons Library briefing on income tax, provides additional analysis and context. The PwC UK tax summaries offer detailed coverage of personal income taxation.

Key points to remember

The personal tax allowance for the 2023/24 tax year is £12,570, representing the tax-free income threshold that applies to most UK taxpayers. This figure has been frozen since 2021/22 and remains the same for 2024/25 and 2025/26 according to confirmed government plans. The taper mechanism means that earners above £100,000 see their allowance reduced by £1 for every £2 of excess income, with complete elimination at £125,140. Tax rates and bands differ between England, Wales, Northern Ireland and Scotland, though the personal allowance itself applies universally across the UK.