The personal allowance is the amount that you can earn either through working or via a pension payment before you start to pay tax.

The personal allowance for 2023/24 is the subject of much debate due to the increase in the rate of the state pension and also of earnings, because the personal allowance is not increasing from the 2022/23 rate.

The rate of personal allowance for 2023/24 will therefore remain at £12,570 as it has done for the last 2 years.

This means that many pensioners in particular will now be taxed, where they have pensions on top of the basic state pension.  The new full basic state pension goes up to £203.85 per week (£10,600.20 per year) with effect from April 2023 so pensioners only need to have additional income of around £2,000 per year in order to be caught in the 20% tax band. Obviously not everyone is receiving the full rate of state pension so they may not be affected.

If you earn less than £12,570 then you do not need to pay any tax on those earnings (provided you do not have any other circumstances which stop you getting that allowance and you do not owe any tax from previous years).

If you now fall into the 20% tax bracket then you may well have already received a tax code that will be applied to your earnings so that the correct amount of tax is being deducted.

Where you receive a state pension and also a private pension, the tax code is usually applied to your private pension.

It is likely that the personal allowance will remain at this rate until April 2028 unless the government changes its policy.