UK Personal Allowance Explained — 2026/27 Guide

The personal allowance is the amount you can earn each tax year before paying any income tax. For 2026/27, it's £12,570. Understanding how it works — and how it can be reduced or transferred — is essential to knowing your true tax position.

What Is the Personal Allowance?

Income up to the personal allowance is completely free of income tax. Only income above £12,570 is subject to tax, starting at 20% (basic rate). This means a person earning exactly £12,570 pays no income tax at all.

The personal allowance is reflected in your tax code. The standard code 1257L means you have a £12,570 tax-free allowance (1257 × 10 = £12,570).

Personal Allowance — 2026/27 Impact

The High-Income Personal Allowance Taper

If your income exceeds £100,000, your personal allowance reduces by £1 for every £2 above that threshold:

• £100,000 income: full allowance £12,570
• £110,000 income: allowance reduced by £5,000 → £7,570
• £120,000 income: allowance reduced by £10,000 → £2,570
• £125,140 income: allowance reaches zero

This taper creates an effective 60% marginal tax rate on income between £100,000 and £125,140 — you pay 40% income tax plus lose 20% worth of allowance on each extra pound.

Marriage Allowance — Transfer Up to £1,260

If you earn under £12,570 and your spouse or civil partner is a basic-rate taxpayer (£12,571–£50,270), you can transfer £1,260 of your unused personal allowance to them. This reduces their tax by £252/year.

You apply once via HMRC and the allowance is transferred each year. You can also backdate claims up to 4 years.

The Personal Allowance Freeze

The personal allowance has been frozen at £12,570 since April 2021. As wages rise with inflation, more earnings are pulled into the basic and higher rate bands — a form of "fiscal drag." By 2028, the freeze will have effectively taxed millions of additional pounds that would previously have been tax-free if the allowance had risen with inflation.