You may be eligible for tax allowances that decrease the amount of income tax you must pay personal tax allowance is the major deduction. The normal Personal tax Allowance for 2022/23 is £12,570, which is the amount of income that is tax-free. However, if you claim Marriage Allowance or Blind Person’s Allowance, your Personal Allowance may be higher. If your income exceeds £100,000, it is reduced.
What is your tax-free Personal Allowance for 2022/23?
The personal tax allowance is the amount of money you may make before having to pay income tax on it. It might be income from a job, income from your own business, or a combination of the two.
The personal allowance is applied to your total income, so if you are both employed and self-employed, you will only get the allowance once.
Personal tax allowance for 2022/23 (6th April 2022 – 5th April 2023) is £12,570, the same as the previous year’s allowance in 2021/22.
The personal allowance for High Earners in 2022/23.
For higher earners, the tax-free Personal Allowance is reduced in 2022/23. Your Personal Allowance is reduced by £1 for every £2 you earn above £100,000. This implies that if you earn more than £125,000, your Personal Allowance is zero.
Income Tax rates and tax bands for 2022/23.
It is often confusing and hard to understand the jargons used. The income tax you pay depends on how much money you earn and how you earn.
When you earn a certain amount of money you will go into a higher bracket and you will be taxed accordingly.
| Tax Rate | 2022/23 Tax Band Thresholds | 2021/22 Tax Band Thresholds |
| Personal allowance: How much income you can earn before you start to pay income tax. You don’t pay tax on this income. | £0 – £12,570 | £0 – £12,570 |
| Basic rate income tax: 20% tax on the proportion of income which falls into this tax bracket. | £12,571 – £50,270 | £12,571 – £50,270 |
| Higher rate income tax: The part of your income which falls into this tax band is taxed at 40% | £50,271 – £150,000 | £50,271 – £150,000 |
| Additional rate income tax: This is the highest rate. The income you earn above this threshold is subject to tax at 45% | £150,000 upwards | £150,000 upwards |
Difference between National Minimum Wage (NMV) and National Living Wage (NLV)
There are standards that specify the bare minimum that businesses must pay their employees based on their age.
Most employees under the age of 23 are paid the National Minimum Wage (NMW) at the age-appropriate rate.
Employees aged 23 and up get the National Living Wage (NLW).
Each tax year, the minimum hourly rates for NLW and NMW vary.
How much is National Minimum Wage in 2022/23?
| Employee Age | 2022/23 National Minimum Wage |
| Apprentices | £4.81 per hour |
| 16 and 17 | £4.81 per hour |
| 18 – 20 | £6.83 per hour |
| 21 and 22 | £9.18 per hour |
What is the National Living Wage?
For the 2021/22 tax year, the age barrier for the National Living Wage (NLW) was reduced from 25 to 23. The National Living Wage hourly rate increased from £8.91 in 2021/22 to £9.50 in 2022/23.
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