How is the income tax threshold for employees known?

The income tax threshold for employees is known as the Personal Allowance. This represents the amount of income an individual can earn before they have to start paying income tax. In the UK, the Personal Allowance is a specific figure that can change annually, allowing individuals to earn a certain amount without being taxed.

The Personal Allowance is essential for understanding income taxation as it lays the foundation for determining tax liability. Once an employee earns above this threshold, they may enter different tax bands that apply rates of income tax on their earnings beyond the allowance. Therefore, it not only highlights the minimum income level exempt from tax but also serves as a significant starting point for calculating income tax obligations over various income levels.