How do changes to personal allowance affect my higher rate threshold?

kimwp

I just read (on a reddit thread) that changes to an individual's personal allowance will change their higher rate threshold by the same amount. I can't see this on gov.uk or money helper - they only say that the personal allowance is "up to £12570" and the higher rate threshold is £50270 (rather than saying personal allowance plus £37,700)

Does anyone know / can point me to guidance?

molerat

The higher rate threshold for PAYE deductions is at £37700 above your coded tax free amount on any single source. That though is completely different from your liability to higher rate tax which is decided by many factors only one of which is your income.

eskbanker

https://forums.moneysavingexpert.com/discussion/6654614/how-do-changes-to-personal-allowance-affect-my-higher-rate-threshold

Specifically what changes to an individual's personal allowance are you thinking of, as many use that terminology loosely and/or inaccurately?

kimwp

https://forums.moneysavingexpert.com/discussion/comment/81877594#Comment_81877594

The fact that my tax code is 1243L for unpaid tax on savings interest.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81877607#Comment_81877607

….which isn't a change to your personal allowance as such! It's just an adjustment to your PAYE coding, but you still have an actual personal allowance of £12,570 to be offset against your income for the year in question.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81877607#Comment_81877607

If you genuinely had a reduced Personal Allowance your tax code suffix would be T, not L. Or it would be a K prefix code.

You are no doubt confusing your Personal Allowance and your tax code allowances. The latter are irrelevant for determining if you need to pay higher rate tax or not.

kimwp

Ah, ok, thank you.

https://www.gov.uk/tax-codes/what-your-tax-code-means#:~:text=What%20the%20numbers%20mean,Allowance%20and%20takes%20off%20any:

The numbers in your tax code tell your employer or pension provider how much tax-free income you get from them in that tax year.

L in tax code means you’re entitled to the standard tax-free Personal Allowance

intalex

rather than saying personal allowance plus £37,700

It seems this is precisely how the higher rate threshold changes and is calculated with a genuine reduction in personal allowance (e.g. from exceeding £100k adjusted net income)… the £50,270 threshold is only for those entitled to the full personal allowance…

kimwp

https://forums.moneysavingexpert.com/discussion/comment/81952205#Comment_81952205

Source please.

intalex

https://forums.moneysavingexpert.com/discussion/comment/81952544#Comment_81952544

From experience of filling in a self assessment and seeing the calculation, but as already mentioned above, this applies to an actual reduction in one's personal allowance e.g. when adjusted net income exceeds £100k, and not just an amended tax code.