Personal allowance (PA)
The basic personal allowances for 2017/18 are:
- All ages - £11,500
For those earning up to £100,000. Above that, it decreases from £11,000 by £1 for every £2 over that you earn. Consequently, it is reduced to £0 for someone earning £123,000.
After your PA, the next £33,500 of your income will be taxed at 20%. Based on a PA of £11,000, as for most people, this means between £11,500 and £45,000.
Taxable income between PA plus £33,500 (£45,000) and £150,000 will be taxed at 40%. NB – lower PA over £100,000 see above.
Taxable income over £150,000 will be taxed at 45%.
Pensions in payment are taxed as income under the above regime. If you have other earnings as well, HMRC will issue a tax coding for each source of income, and you will have only one personal tax allowance overall.