HMRC has officially announced a plan that allows many taxpayers to effectively raise their tax-free Personal Allowance to £13,570 through a specific rule. This isn’t a change to the standard allowance but a way to gain an extra £1,000 in tax-free income under certain conditions.
The standard Personal Allowance remains frozen at £12,570 for the current tax year and beyond, as confirmed in recent budgets. However, headlines about £13,570 refer to a practical boost available to some people, often linked to side income or specific circumstances that interact with HMRC rules.
This development has caught attention as people look for ways to keep more of their earnings amid frozen thresholds and rising costs.
What is the standard Personal Allowance right now?
The Personal Allowance is the amount of income you can earn each tax year before paying income tax. For most people in England, Wales, and Northern Ireland, it’s £12,570. Scotland has its own starter rates, but the base figure aligns similarly.
- If your total income (wages, pension, etc.) stays below £12,570, you pay no income tax.
- Above that, you enter the basic rate band (20% tax) up to £50,270.
The allowance has been frozen since 2021, with extensions confirmed through at least 2027/28 or later, meaning no automatic rise to match inflation.
How does the £13,570 figure come into play?
The £13,570 isn’t a new official threshold announced by HMRC as a direct increase. Instead, it stems from a rule or quirk that lets eligible taxpayers add an extra £1,000 in tax-free income on top of the £12,570 base.
This often applies in cases like:
- Claiming certain reliefs or allowances during Self Assessment.
- Side hustles or additional earnings that qualify under HMRC guidelines for extra tax-free portions.
- Specific situations where income types interact to extend the effective zero-tax band.
Tax experts note this as a legitimate way to boost your tax-free amount to £13,570 without breaking rules. It’s not automatic for everyone – it depends on your income sources and whether you meet the criteria.
- For example, some reports highlight how side income or particular deductions can unlock this extra £1,000 tax-free.
- It’s separate from other boosts like the Personal Savings Allowance (£1,000 for basic-rate taxpayers) or starting rate for savings.
Who benefits from this £13,570 effective allowance?
This applies mainly to workers, self-employed people, or those with side income who can claim or qualify under the relevant HMRC provision. Pensioners or those with only state pension might see less direct benefit unless they have additional earnings.
- Low to moderate earners with side hustles stand to gain the most.
- It helps offset the frozen £12,570 by giving a small but useful extra buffer before tax kicks in.
Higher earners (over £100,000) see the standard allowance taper anyway, so this rule may not apply fully.
What should you do if you want to access this?
Check your eligibility through your Self Assessment or by reviewing HMRC guidance. Many people discover this when filing returns or getting advice from tax professionals.
- Update your records and claim any qualifying reliefs promptly.
- Consider if your income setup (e.g., adding legitimate side work) fits the rule for the extra £1,000.
Contact HMRC directly if unsure – they can clarify based on your situation. Avoid unofficial sources claiming big changes without evidence.
HMRC’s plan to let taxpayers reach an effective £13,570 tax-free Personal Allowance via this rule offers a helpful workaround while the standard £12,570 stays frozen. It’s not a full threshold increase but a targeted way to reduce tax bills for those who qualify, especially with side income or specific claims. This small boost can make a difference for everyday earners facing cost pressures. Always verify details on GOV.UK or with HMRC to ensure you apply it correctly and avoid surprises.
FAQs
Is the Personal Allowance really increasing to £13,570 for everyone?
No – the standard allowance is still £12,570. The £13,570 figure refers to an effective boost of £1,000 extra tax-free under a specific HMRC rule, not available to all taxpayers automatically.
Will this change affect my tax code or payments?
It often involves claiming eligible reliefs, side hustle income that qualifies, or other HMRC provisions during tax returns. Details vary by individual – check official guidance or consult HMRC.
Will this change affect my tax code or payments?
If you qualify and claim it correctly (e.g., via Self Assessment), it could adjust your tax liability. It won’t automatically change PAYE codes unless you notify HMRC.
Does this apply to pensioners or only workers?
It can apply to anyone with qualifying income types, including some pensioners with additional earnings. Pure state pension recipients usually stay within the base £12,570.
Is there a bigger increase coming, like to £20,000?
No official plan exists for a jump to £20,000 or similar large rises soon. Discussions happen, but current policy keeps the allowance frozen for years ahead. Check GOV.UK for updates.
