Loss of personal allowance

Euan
July 1, 2022

    If your taxable income exceeds £100,000 you will suffer a reduction in your personal tax allowance.

    For every £2 that your income exceeds £100,000, £1 will be knocked off your allowance. The reduction is progressive and means that once your income exceeds £125,140 your personal allowance of £12,570 will be reduced to zero.

    As Income Taxpayers with income in the range, £100,000 to £125,140, are paying tax at 40%, the gradual loss of the personal tax allowance means that the effective rate of tax in this range is 60% not 40%.

    Accordingly, if you are affected by this process, tax planning to reduce your income below the £100,000 threshold would be cost effective.

    This may involve consideration of pension top-ups, deferring income, sacrificing salary for additional holidays, or other planning options that may be available to you.

    Please call so we can help you consider your options.

    Source: DocSafe

    More Blog Posts

    From 18 November 2025, new rules mean that all UK company directors and People with Significant Control (PSCs) must verify their identity with Companies House.

    Managing payroll can be a complex and time-consuming task for businesses. With ever-changing tax regulations, auto-enrolment requirements, and employee benefits to consider, getting payroll right

    For many small business owners, understanding how to take money out of your company can be confusing. You might own the business, but it doesn’t

    Running a trades business isn’t just about doing great work—it’s about managing quotes, scheduling jobs, tracking costs, invoicing clients, and keeping everything profitable. The problem?

    Growing a business is tough. You’re making big decisions daily—hiring, investing, expanding—but how do you know if you’re making the right decisions? That’s where a

    Running a business is fast-paced, and outdated accounting systems can hold you back. If you’re still using Sage or even Xero Online but feel like

    Running a business is tough. You’re juggling sales, operations, customer service, and—let’s be honest—probably dealing with a mountain of financial admin too. But here’s the

    A raft of money changes comes into play this month which could affect your finances, and as we are approaching the winter season – dark

    Sign Up For More Updates

    Get email updates by signing up to our mailing list

    Email Signup

    Ready to Turn These Insights Into Action With Us?