Personal tax is usually referred to as your individual income tax. Your income tax amount that you pay each year depends on the amount that you earn above your personal allowance.

You, as a taxpayer, are entitled to a personal tax allowance on your taxable income. The income tax threshold is usually known as the personal allowance tax. Personal tax allowance is applied in all four nations in the United Kingdom. However, the amount may differ in all.

What is the standard amount of personal tax allowance?

For 2021, the standard amount of personal tax allowance is £12,570. It means that you can earn this amount tax-free. Any amount under or up to £12,750 will be your tax-free personal allowance. The taxable amount will be anything you make more than the standard amount mentioned earlier, even if you are self-employed or employed by someone else. Your payable tax amount depends on your earnings during the tax year. The income limit for personal allowance for 2021/2022 is £100,000. Your personal tax allowance is reduced by £1 for every £2 you earn over the threshold amount, i.e., £100,000.

When does the personal tax allowance work differently?

Your personal tax allowance works differently for different reasons. Your personal tax allowance amount is different and mostly more significant in some of the following complex conditions:

  • You are in a civil partnership.
  • You are married.
  • You are entitled to a marriage allowance.
  • Some other reasons are related to age or other issues related to income.

Personal Tax Account

You can digitally manage your tax information and allowances using your personal tax account. It is a safe online portal that keeps your tax information secure, and you can safely update and manage your personal tax information through it.

Why do you need a Personal Tax Account?

You need a personal tax account to update and manage your tax information. Further, you can use it for:

  • Reviewing and filling in your personal tax returns.
  • Tax refund claiming.
  • Updating different allowances like marriage allowance.
  • Checking your tax codes.
  • Estimation of your income tax.
  • Finding your national insurance number.

You can claim and get your tax-free personal allowance by filing a self-assessment tax return.

What do you need to do?

You get your tax code in a P2 notice of the coding letter from HMRC. You are required to check this tax code using your personal tax account. The digital or numerical part of the tax code is the amount of your personal tax allowance. If the numerical part of the code is incorrect, you are paying the wrong amount of tax. You can claim a refund if you are overpaying. Or, you will pay the difference to HMRC if you have paid less tax.

You must pay the correct amount of tax and update your personal tax information using your personal tax account to avoid any problems in the future. You can change your tax code or check it with the help of HMRC.