Tax Free Allowance & Director's Salary
Your Personal Allowance is the amount you are allowed to earn before you have to start paying income tax.
In 2022/23, the Personal Allowance is £12,570.
You only pay tax on the part of your income that is above the Personal Allowance threshold. For instance, if you earn £16,000 in a year, you’ll only pay income tax on £3,430.
£16,000 (salary) – £12,570 (tax free Personal Allowance) = £3,430. The amount subject to income tax is £3,430.
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