Personal allowance (PA) Explained - Surya & Co Accountants

All individual receive a PA every tax year. For 2019-20 the Personal allowance is £12,500
This is set against income, generally vs. non-savings income, then vs. savings income and then vs. dividend income.
Any unused PA cannot be carried forward to the next tax year.
PA is reduced by £1 for every £2 of income if a person’s adjusted net income exceeds £100,000.
Hence, a person with adjusted net income of £123,700 or more in 2019-20 will not receive any PA.
If adjusted net income is between £100,000 and £123,700 (in 2019-20) the effective marginal rate of income tax is 60% (the higher rate of 40% + an extra 20% as a result of the withdrawal of PA).
In this case, it may be beneficial to pay additional personal pension contributions or Gif Aid donations or to use trading loss relief if self-employed.