Finance & Moneybeginner
Personal Allowance
Definition
The amount of income you can earn tax-free each year in the UK. For 2024/25, this is £12,570.
Why it matters
Every founder should structure their income to maximise the personal allowance before taking taxable income. A £12,570 salary from your limited company uses the full allowance with zero income tax.
Example
You pay yourself a £12,570 salary (using your personal allowance, no income tax due). Additional income is taken as dividends at a lower rate. Efficient and legal tax planning.
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