At what income level does the Personal Allowance begin to be restricted?

The restriction of the Personal Allowance begins when an individual's income exceeds £100,000. At this threshold, the Personal Allowance, which is an amount of income that is not subject to income tax, starts to gradually decrease. For every £2 of income above £100,000, the Personal Allowance is reduced by £1.

This mechanism is designed to taper the benefit of the Personal Allowance for higher earners, ensuring that those with an income higher than £100,000 contribute more to the tax system. By the time an individual's income reaches £125,140 or above, the Personal Allowance is completely eliminated, meaning that they pay tax on their entire income.

Recognizing this threshold is crucial for tax planning and understanding how income levels interact with tax reliefs and allowances.