The Personal Allowance is the amount you can earn each year completely free of income tax. In 2026/27 it remains frozen at £12,570 — here is everything you need to know.
Personal Allowance 2026/27: £12,570. This is the amount of income you can receive before paying income tax. It has been frozen since 2021/22 — meaning more people are being pulled into income tax and higher rate tax as wages rise. This process is called fiscal drag.
Every UK taxpayer receives the Personal Allowance automatically through their tax code — usually 1257L. You pay no income tax on your first £12,570 of earnings. Above that threshold, basic rate tax at 20% applies up to £50,270, then higher rate at 40% up to £125,140.
The allowance is reflected in your tax code. Code 1257L means your allowance is £12,570. Codes starting with BR mean no allowance is applied to that income stream — usually because you have a second job.
For a full breakdown of all tax bands and how they stack, see the UK income tax bands 2026/27 guide.
| Income Band | Tax Rate | 2026/27 Threshold |
|---|---|---|
| Personal Allowance | 0% | Up to £12,570 |
| Basic Rate | 20% | £12,571 – £50,270 |
| Higher Rate | 40% | £50,271 – £125,140 |
| Additional Rate | 45% | Above £125,140 |
The Personal Allowance starts to reduce once your adjusted net income exceeds £100,000. For every £2 earned above £100,000 you lose £1 of your allowance:
This creates an effective marginal tax rate of 60% on income between £100,000 and £125,140 — known as the 60% tax trap.
If your income is above or close to £100,000, pension contributions are the most effective tool:
For employees, salary sacrifice is the most tax-efficient route as contributions reduce gross pay before PAYE is calculated. See the salary sacrifice calculator for a full breakdown.
The Personal Allowance has been frozen at £12,570 since April 2021 and is due to remain frozen until April 2028. With average wages rising each year, more workers are crossing the income tax threshold for the first time, and more basic rate taxpayers are being pushed into the higher rate band — without a single rate increase being announced.
The Office for Budget Responsibility estimates that several million additional workers will pay income tax or move into a higher band by 2028 purely as a result of this freeze.
The Personal Allowance is £12,570 for 2026/27. It has been frozen at this level since 2021/22. The freeze is scheduled to end in 2028/29 when indexation is due to resume.
Most UK residents get the full £12,570 allowance. Those earning above £100,000 see it reduced — by £1 for every £2 above that threshold — and those earning above £125,140 lose it entirely. Non-residents may be entitled to a reduced allowance depending on their circumstances.
Between £100,000 and £125,140, you lose £1 of Personal Allowance for every £2 earned above £100,000. Combined with the 40% higher rate, this creates an effective marginal tax rate of 60% on income in that band. Pension contributions can reduce adjusted net income back below £100,000.
Fiscal drag occurs when the Personal Allowance and tax thresholds are frozen while wages rise with inflation. This pulls more people into paying income tax, or into higher rate tax, without any formal rate increases — effectively a stealth tax rise.
Your tax code appears on your payslip, P60, or P2 notice from HMRC. You can also check via your HMRC personal tax account online. If your code appears wrong, contact HMRC or your employer's payroll team.
Yes — the £12,570 Personal Allowance applies to Scottish taxpayers in the same way. However, Scottish taxpayers pay Scottish Income Tax rates on income above the allowance, which differ from the rest of the UK. National Insurance is the same across the whole of the UK.
The free salary calculator uses the 2026/27 Personal Allowance and all current rates automatically.
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