Income Tax Threshold
In short
The specific amount of money an individual earns before they are required to start paying income tax to the government.
In plain words
It is the line between earning tax-free money and earning taxable money. Anything you earn below this limit is yours to keep in full. Once you cross it, the government takes a percentage of your extra earnings.
A simple example
If your tax-free threshold is £12,500 and you earn £15,000, you only pay tax on the £2,500 difference. You do not pay tax on the whole £15,000.
Why it matters
It determines how much take-home pay a worker actually receives. Changes to this limit can significantly affect the cost of living for different income groups.
Easy to mix up
Do not confuse this with a tax bracket, which is the percentage rate you pay on your income.