The personal allowance explained for 2026/27
Published 2026-08-29, checked against current rates 2026-08-28.
The personal allowance is the amount you can earn each tax year before paying any income tax at all. For 2026/27 it is £12,570, unchanged, and it is the reason a standard tax code reads 1257L: the digits are the allowance with the final zero removed. Earn £12,570 or less and your income tax bill is nil. Earn more and only the excess is taxed, starting at 20%. In cash the allowance is worth £2,514 a year to a basic-rate taxpayer and £5,028 to a higher-rate one, because it shelters income that would otherwise be taxed at their top rate. Two catches: the allowance is withdrawn entirely between £100,000 and £125,140 of income, and National Insurance does not use it. Figures checked 2026-08-28.
The income tax calculator applies your personal allowance, taper included, and shows the tax due band by band for any salary.
See your allowance appliedWhat is the personal allowance?
It is a 0% band, not a rebate. HMRC does not hand you £12,570: it simply does not tax the first £12,570 you earn. Everyone resident in the UK for tax purposes gets one allowance in total, spread across all their income, which is why a second job is usually taxed at a flat rate with no allowance attached: the allowance is already being used by the first job. It applies UK-wide, including in Scotland and Wales, because it is set by Westminster even though Scotland sets its own rates and bands on top of it.
Why is my personal allowance different?
Four situations change it, and all four show up in your tax code:
- You earn over £100,000. The allowance falls by £1 for every £2 above that, reaching zero at £125,140. Covered in detail below.
- You transferred part of it. Marriage allowance moves £1,260 of allowance to a spouse, worth up to £252 a year to the couple. The giver's code gains an N, the receiver's an M.
- You owe tax from an earlier year, or have a taxable benefit. A company car or private medical cover reduces your allowance so the tax is collected through payroll. A K code means the deductions exceed the allowance entirely.
- You are on an emergency code. Then your allowance is being applied to each pay period in isolation, or not at all. See the emergency tax code guide, or decode yours with the tax code checker.
What happens to the personal allowance over £100,000?
It is withdrawn at £1 for every £2 of income above £100,000, so it is gone completely at £125,140. Inside that window each extra pound of salary is taxed at 40% and simultaneously exposes fifty pence of previously tax-free income to 40% tax, producing an effective marginal rate of 60% before National Insurance. It is the highest marginal rate in the UK income tax system, higher than the additional rate paid by people earning far more.
| Income | Personal allowance left | Rate on the next £1 |
|---|---|---|
| £100,000 | £12,570 | 62% |
| £105,000 | £10,070 | 62% |
| £110,000 | £7,570 | 62% |
| £120,000 | £2,570 | 62% |
| £125,140 | £0 | 47% |
The standard escape is a pension contribution, because it reduces the income the taper is measured against and rebuilds the allowance pound for pound. The £100k tax trap calculator shows how much of a bonus you would keep and how much a contribution returns, and the adjusted net income calculator works out the figure the taper is actually applied to, which is not the same as your salary.
Does the personal allowance apply to National Insurance?
No, and this catches people out constantly. National Insurance uses its own threshold, which happens to be £12,570 for 2026/27, and it is charged per pay period rather than annually. Two consequences follow. Someone with a large personal allowance from a tax code adjustment still pays full NI. And someone earning under the personal allowance in most months but spiking in one, through a bonus or overtime, pays NI on that spike that they cannot reclaim at year end, even though the income tax evens out.
Is the personal allowance frozen?
Yes. It has been £12,570 since April 2021. Prices have not stood still: the ONS consumer prices index has risen from 110.1 to 142.9 over the same period (July 2026). Had the allowance kept pace, it would now be around £16,315 rather than £12,570, which means roughly £3,745 of income per person has moved from the 0% band into taxed bands without any rate ever changing. That quiet mechanism is called fiscal drag, and our fiscal drag calculator puts a number on what it has cost you personally.
Do I get a personal allowance on savings and dividends?
The personal allowance covers all types of income, including savings interest and dividends. On top of it there are two separate allowances: the personal savings allowance and the dividend allowance, each with its own rules. They stack with the personal allowance rather than replacing it, so a basic-rate taxpayer can receive the personal allowance, savings interest inside the savings allowance, and dividends inside the dividend allowance, all without paying income tax on any of it.
Sources
- gov.uk: income tax rates and personal allowances
- HMRC: rates and thresholds for employers 2026 to 2027
- ONS: consumer price inflation time series (D7BT)
- gov.uk: marriage allowance
Every figure on this page is computed from those tables at build time, checked 2026-08-28. If a number here ever disagrees with gov.uk, gov.uk is right and this is a bug worth telling us about. See our corrections policy.
Related guides
The personal savings allowance explained
£1,000, £500 or nothing, depending on a band your salary decides. Plus the separate £5,000 starting rate for low earners.
Emergency tax codes and how to fix them
W1, M1, X, BR and 0T. What each one does to a payslip, how much it costs, and how to get the overpayment back.
All 10 guides are listed on the guides index, and every calculator on the home page.