How much can you earn before paying tax UK?

Most people can earn up to £12,570 per year before paying Income Tax — this is the standard Personal Allowance for 2025/26 and 2026/27. However, you can earn more than this tax-free when you add other allowances: up to £1,000 from a side business (trading allowance), up to £500–£1,000 from savings interest (depending on your tax band), and up to £500 from dividends. Below the table shows every tax-free allowance available.

Do I pay tax on two jobs?

Your Personal Allowance (£12,570) is usually applied to your main job. If you have a second job, you will typically pay tax from the first pound you earn in that second job because your full tax-free allowance is already used by your main job. However, you can ask HMRC to split your Personal Allowance across two jobs. Your total tax-free amount stays the same — £12,570 — regardless of how many jobs you have.

At what age do you stop paying tax UK?

There is no age at which you stop paying tax. If your income exceeds the Personal Allowance (£12,570), you pay Income Tax regardless of age. The State Pension counts as taxable income, so if your State Pension plus any other income exceeds £12,570, you will pay tax on the excess. However, pensioners may qualify for Marriage Allowance transfer or Pension Credit which can reduce their tax bill.

Do I lose my Personal Allowance if I earn over £100,000?

Yes — once your adjusted net income exceeds £100,000, your Personal Allowance is reduced by £1 for every £2 of income above £100,000. This means your Personal Allowance is completely removed at £125,140. The effective marginal tax rate in this band is 60% (you lose 40p in allowance for every extra £1 earned, on top of 40% tax). Making pension contributions can bring your income below £100,000 and restore your full allowance.

Can I earn £1,000 tax-free from a side hustle UK?

Yes — the £1,000 trading allowance is separate from your Personal Allowance. You can earn up to £1,000 from self-employment or casual work without paying tax or even telling HMRC — this is on TOP of your £12,570 Personal Allowance from your main job. So a full-time employee could earn £12,570 from work tax-free plus another £1,000 from a side hustle.

How much can a student earn before paying tax UK?

Students get exactly the same Personal Allowance as everyone else — £12,570 per year. There's no special student rate. If you work part-time during studies and earn under £12,570, you pay no Income Tax. You also won't pay National Insurance on earnings under £12,570/year. Many students accidentally overpay tax and can claim refunds.

How much can a pensioner earn tax-free UK?

Pensioners get the same £12,570 Personal Allowance as working-age people. The State Pension counts as taxable income, so if your State Pension plus any other income exceeds £12,570, you'll pay tax. In 2025/26, the full new State Pension is £11,502.40/year — just under the Personal Allowance. Any extra income (private pension, savings, part-time work) will push you into paying tax.

Is Universal Credit taxable?

No — Universal Credit and most other state benefits are not taxable. This includes Housing Benefit, PIP, DLA, Child Benefit (though high earners may need to repay through HICBC), Attendance Allowance, and Carer's Allowance. However, contributory ESA and Jobseeker's Allowance ARE taxable but usually covered by your Personal Allowance.

How Much Can I Earn Tax-Free in the UK? (2025/26 & 2026/27)

For a comprehensive overview of income tax, see our Income Tax guide.

Everyone in the UK gets several tax-free allowances. Here is every allowance you can use to earn income without paying tax.

The standard answer is £12,570 — but that’s only the beginning. Stack up all the available allowances and a typical employee can earn considerably more before paying a penny of tax. A basic-rate taxpayer with a side hustle, some savings, and a small investment portfolio could shelter over £15,000 in income from tax each year, without any complex planning.

Some allowances are automatic: the £12,570 Personal Allowance applies to nearly everyone and is factored into your tax code. Others require you to know they exist and sometimes to claim them actively — particularly the trading allowance for side income, the starting rate for savings, and the Marriage Allowance.

The Short Answer

Most people can earn £12,570 per year tax-free from employment or self-employment. But there are additional allowances on top of this.

Complete Tax-Free Allowances — 2025/26 and 2026/27

Allowance	Tax-free amount	What it covers
Personal Allowance	£12,570 per year	Employment income, self-employment profits, pension income
Trading Allowance	£1,000 per year	Side income from self-employment or casual work
Property Allowance	£1,000 per year	Income from renting property (e.g. spare room via Airbnb)
Rent a Room Scheme	£7,500 per year	Income from letting a furnished room in your home
Personal Savings Allowance (basic rate)	£1,000 per year	Interest from savings accounts
Personal Savings Allowance (higher rate)	£500 per year	Interest from savings accounts
Personal Savings Allowance (additional rate)	£0	No allowance — all interest taxed
Starting Rate for Savings	Up to £5,000	If your non-savings income is below £12,570
Dividend Allowance	£500 per year	Dividends from shares or your own company
ISA Allowance	£20,000 per year	All returns within ISAs — interest, dividends, capital gains
Capital Gains Tax Annual Exempt Amount	£3,000 per year	Profits from selling assets (shares, property, crypto)
Marriage Allowance	£1,260 transfer	Transfer 10% of Personal Allowance to spouse/civil partner
Junior ISA	£9,000 per year	Savings and investments for under-18s — tax-free
Lifetime ISA	£4,000 per year (within ISA allowance)	25% government bonus for house purchase or retirement
National Insurance threshold	£12,570 per year	No NI on earnings below this (employees)
Trivial benefits (employed)	£50 per benefit	Small non-cash benefits from your employer
Pension Annual Allowance	£60,000 per year	Tax relief on pension contributions

Income Tax Bands — 2025/26 and 2026/27

Band	Rate	Taxable income
Personal Allowance	0%	£0–£12,570
Basic rate	20%	£12,571–£50,270
Higher rate	40%	£50,271–£125,140
Additional rate	45%	Over £125,140

Scotland has different tax bands:

Band	Rate	Taxable income
Personal Allowance	0%	£0–£12,570
Starter rate	19%	£12,571–£14,876
Basic rate	20%	£14,877–£26,561
Intermediate rate	21%	£26,562–£43,662
Higher rate	42%	£43,663–£75,000
Advanced rate	45%	£75,001–£125,140
Top rate	48%	Over £125,140

National Insurance Thresholds — 2025/26

Threshold	Amount	NI rate
Below Primary Threshold	Under £12,570/year	0%
Primary Threshold to Upper Earnings Limit	£12,571–£50,270/year	8% (employees)
Above Upper Earnings Limit	Over £50,270/year	2% (employees)

Self-employed NI (Class 4):

Threshold	NI rate
Below Lower Profits Limit (£12,570)	0%
£12,571–£50,270	6%
Over £50,270	2%

Common Scenarios — Tax-Free Income

The table below shows how the various allowances combine in practice for different types of earner. The key insight is that most of these allowances stack — they’re separate from each other rather than subtracted from the same pot.

Scenario	Tax-free amount
Employee, no savings or investments	£12,570
Employee with savings interest	£12,570 + £1,000 savings allowance = £13,570
Employee with dividends	£12,570 + £500 dividend allowance = £13,070
Employee with side hustle under £1,000	Employment income up to £12,570 tax-free + £1,000 trading allowance on top
Self-employed only income	£12,570 (or £13,570 if income under £17,570 and uses starting rate for savings)
Renting out a spare room	£7,500 Rent a Room + £12,570 Personal Allowance on other income
Student with a part-time job	£12,570 — students get the full Personal Allowance
Pensioner (State Pension only)	State Pension is taxable but if under £12,570, no tax to pay
ISA saving	Any amount within £20,000/year ISA limit — all returns tax-free, no limit on total pot

The £100,000 Trap — Losing Your Personal Allowance

Income	Personal Allowance	Effective marginal rate
Up to £100,000	£12,570	40%
£100,001	£12,569.50	60%
£110,000	£7,570	60%
£120,000	£2,570	60%
£125,140	£0	40% (back to normal higher rate)
Over £125,140	£0	45%

Between £100,000 and £125,140, your effective marginal tax rate is 60% because you’re losing £1 of Personal Allowance for every £2 earned.

How to Avoid the £100,000 Trap

Strategy	Effect
Pension contributions	Reduce adjusted net income below £100,000
Salary sacrifice	Same effect — reduces your taxable income
Gift Aid donations	Extend your basic rate band and can reduce adjusted net income
Spreading income over tax years	If possible, defer bonuses or income to a lower-earning year

Key Facts

Question	Answer
When does the tax year start?	6 April
When does the tax year end?	5 April
Will the Personal Allowance increase?	Frozen at £12,570 until at least April 2028
Is the State Pension taxable?	Yes — but collected through reduced Personal Allowance on other income, not through a tax code on the pension itself
Do children pay tax?	Yes, if they earn over £12,570 — they have the same Personal Allowance as adults
Is Universal Credit taxable?	No — benefits are generally not taxable

Students and Young People — Tax-Free Earnings

Students have the same Personal Allowance as everyone else — there’s no special rate. This is widely misunderstood: many students doing holiday work or part-time jobs are put on emergency tax codes by default and can end up paying tax they don’t owe. If you’re a student who has been taxed and your total earnings for the year are below £12,570, you can claim a full refund from HMRC.

Situation	Tax-free amount
Student with part-time job	£12,570/year (same as adults)
Student working summer holidays	£12,570/year (pro-rata applies)
Gap year worker	£12,570/year
Apprentice	£12,570/year
Paper round / babysitting (under £1,000)	Often covered by trading allowance

Common Student Tax Mistakes

Mistake	Solution
Emergency tax on first job	Apply for tax refund via P50 or wait until tax year end
Multiple jobs not coded correctly	Contact HMRC to split Personal Allowance
Not claiming refund after leaving	Submit P85 if leaving UK or wait for automatic refund
Paying tax on bank interest	PSA usually covers — claim back if overpaid

Side Hustle Tax Rules — The £1,000 Trading Allowance

If you have a side hustle alongside a main job, you get extra tax-free income.

Type of side income	Allowance	On top of Personal Allowance?
Selling on eBay/Vinted	£1,000	Yes — separate allowance
Freelance work (Fiverr, Upwork)	£1,000	Yes
Tutoring	£1,000	Yes
Dog walking, cleaning	£1,000	Yes
Delivering for Deliveroo/Uber	£1,000 (if self-employed)	Yes
Renting room via Airbnb	£1,000 property allowance OR £7,500 Rent a Room	Yes
Car boot sales (personal items)	Usually not taxable	N/A

When You Must Register with HMRC

Income level	Action required
Under £1,000	No action needed — don’t even need to tell HMRC
£1,000–£12,570 (only income)	Register as self-employed but no tax to pay
Over £1,000 (with employment)	Register, complete Self Assessment, claim trading allowance OR deduct expenses

Pensioners — Tax-Free Income

Income source	Tax treatment
State Pension	Taxable — but uses your Personal Allowance
Private/workplace pension	Taxable
Pension lump sum (25% of pot)	Tax-free
ISA withdrawals	Tax-free
Premium Bond prizes	Tax-free
Savings interest (up to PSA)	Tax-free
Pension Credit	Not taxable
Attendance Allowance	Not taxable

Example: Pensioner Tax Calculation

Income	Amount
State Pension	£11,502
Private pension	£5,000
Total income	£16,502
Less Personal Allowance	£12,570
Taxable income	£3,932
Tax at 20%	£786.40

How Pensioners Can Reduce Tax

Strategy	Effect
Transfer Marriage Allowance	Save up to £252/year if spouse earning less
Use ISA allowance	Future income tax-free
Gift excess income	Reduces estate for IHT
Consider deferring State Pension	Higher payments later

How to Check Your Tax-Free Allowance

Method	Details
HMRC Personal Tax Account	Shows your Personal Allowance and tax code
P60 (end of tax year)	Shows total tax-free amount used
Payslip	Tax code shows allowance (1257L = £12,570)
HMRC app	Check your tax situation
Call HMRC	0300 200 3300