Income Tax UK: Tax Codes, Allowances, PAYE, Scottish Rates and Reliefs

Personal Allowance 2026/27 — How Much Can You Earn Tax-Free?

Your complete guide to the Personal Allowance for 2026/27 tax year. £12,570 tax-free amount explained, plus how it's reduced over £100,000 income and what affects your allowance.

· · Last reviewed: · 5 min read Updated for 2026/27 tax year

Tax information is based on HMRC rules for the 2026/27 tax year. Tax rules can change — always verify current rates at GOV.UK. This is not tax advice. Consider consulting a qualified tax adviser for your personal situation.

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

The Personal Allowance is the amount you can earn each year without paying income tax. For 2026/27, it’s £12,570.

Personal Allowance 2026/27 — The Basics

FactDetail
Amount£12,570 per year
Monthly equivalent£1,047.50
Weekly equivalent£241.73
Daily equivalent£34.44

Everyone gets the same Personal Allowance regardless of age, employment status, or whether you’re working or retired.

What Counts as Income Against Your Personal Allowance?

Counts Towards AllowanceDoesn’t Use Your Allowance
Employment salaryISA interest and gains
Self-employment profitsPremium Bond prizes
Pension incomePersonal Savings Allowance (up to £1,000)
State PensionDividend Allowance (first £500)
Rental incomeLottery winnings
Taxable benefitsMost state benefits (UC, PIP, etc.)
Interest above PSACapital gains (has separate allowance)

How the Personal Allowance Saves Tax

Example: £30,000 Salary

Without Personal AllowanceWith Personal Allowance
£30,000 taxed at 20% = £6,000£30,000 - £12,570 = £17,430 taxable
£17,430 × 20% = £3,486
Tax saved by Personal Allowance£2,514

The £100,000 Personal Allowance Reduction

Your Personal Allowance is reduced if your adjusted net income exceeds £100,000.

How the Reduction Works

IncomePersonal AllowanceTax on £100k+ Band
Up to £100,000£12,57040%
£100,001£12,569.5060% effective
£105,000£10,07060% effective
£110,000£7,57060% effective
£115,000£5,07060% effective
£120,000£2,57060% effective
£125,140£045%
£130,000+£045%

Why the Effective Rate Is 60%

For every £2 you earn above £100,000, you lose £1 of Personal Allowance. Here’s what happens:

Earn Extra £1,000CalculationTax Impact
Regular 40% tax£1,000 × 40%£400
Lost allowance (£500) taxed at 40%£500 × 40%£200
Total tax on extra £1,000£600 (60%)

Example: £110,000 Salary

StepCalculation
Income over £100,000£110,000 - £100,000 = £10,000
Allowance reduction£10,000 ÷ 2 = £5,000 less
Remaining allowance£12,570 - £5,000 = £7,570
Taxable income£110,000 - £7,570 = £102,430

How to Restore Your Personal Allowance

If you earn slightly over £100,000, these strategies can reduce your adjusted net income to restore your allowance:

Strategy 1: Pension Contributions

Gross Pension ContributionAdjusted Net IncomePersonal Allowance
£0£110,000£7,570
£5,000£105,000£10,070
£10,000£100,000£12,570 (full)

Every £1 in pension contributions above the £100k threshold has an effective value of £1.67 due to restored allowance.

Strategy 2: Salary Sacrifice

Same effect as pension contributions — your gross salary is reduced before tax.

Strategy 3: Gift Aid Donations

Gift Aid donations extend your basic rate band and reduce adjusted net income.

Strategy 4: Spread Income Across Tax Years

If possible, defer bonuses or income to a year when you’re under £100,000.

Which Strategy Works Best?

StrategyBest For
Pension contributionsBuilding retirement savings (most common)
Salary sacrificeAlso reducing NI
Gift AidIf you’re charitable anyway
Deferring incomeSelf-employed or bonus-heavy compensation

Marriage Allowance — Sharing Your Allowance

If one partner earns under £12,570 and the other is a basic rate taxpayer, you can transfer £1,260 of the lower earner’s Personal Allowance to the higher earner.

Marriage Allowance Details

ItemAmount
Amount transferred£1,260 (10% of Personal Allowance)
Tax savingUp to £252/year
Transferrer’s new allowance£11,310
Recipient’s new allowance£12,570 + £1,260 = £13,830

Who Can Claim?

RequirementDetail
RelationshipMarried or civil partnered
Transferrer incomeUnder £12,570
Recipient incomeBasic rate taxpayer (under £50,270)
Recipient locationCannot be Scottish at higher rate

How to Apply

  1. Apply online at gov.uk/marriage-allowance
  2. Provide National Insurance numbers for both
  3. HMRC adjusts tax codes automatically
  4. Can backdate up to 4 years (claim up to £1,008)

Blind Person’s Allowance

If you’re registered blind (or severely sight impaired), you get an extra allowance:

Tax YearBlind Person’s AllowanceTotal with PA
2026/27£3,070£15,640

This can also be transferred to a spouse if you can’t use it all.

Personal Allowance for Non-Residents

SituationPersonal Allowance?
UK residentFull £12,570
Non-resident British citizenYes (or reduced if income over £100k)
Non-resident EU/EEA citizenYes
Non-resident with UK employmentUsually yes
Non-resident with only UK rental incomeUsually yes, but check your tax treaty
Non-resident, country without tax treatyPossibly no

Common Questions by Situation

Students

QuestionAnswer
Do students get Personal Allowance?Yes — full £12,570
Part-time work while studyingTax-free up to £12,570
Summer job earningsCounts towards annual allowance
Student loanNot a tax — separate repayment

Pensioners

QuestionAnswer
Personal Allowance at 65+?Same £12,570 (age-related allowances abolished 2016)
State Pension taxable?Yes — uses your Personal Allowance
Private pension taxable?Yes — uses your Personal Allowance
Tax code on pension?Usually includes remaining allowance after State Pension

Multiple Jobs

QuestionAnswer
Two jobs — two allowances?No — one £12,570 allowance total
How is it split?Usually all to main job, second job taxed from £1
Can I split it?Yes — contact HMRC to divide between jobs
What if main job is under £12,570?Remaining allowance applied to second job

Self-Employed

QuestionAnswer
Same allowance as employed?Yes — £12,570
When is it applied?On your Self Assessment
Trading Allowance separate?Yes — additional £1,000 before Personal Allowance

Personal Allowance History

Tax YearPersonal AllowanceChange
2026/27£12,570Frozen
2025/26£12,570Frozen
2024/25£12,570Frozen
2023/24£12,570Frozen
2022/23£12,570Frozen
2021/22£12,570+£70
2020/21£12,500+£650
2019/20£12,500+£650
2018/19£11,850+£350
2017/18£11,500+£500

The freeze from 2021/22 to 2027/28 (at least) is estimated to bring millions more people into paying income tax and push existing taxpayers into higher bands.

Tax Codes and Personal Allowance

Your tax code shows how much Personal Allowance you’re receiving:

Tax CodeMeaningPersonal Allowance
1257LStandard£12,570
1131LMarriage Allowance transferrer£11,310
1383LMarriage Allowance recipient£13,830
1564LBlind Person’s Allowance£15,640
BRBasic Rate (no allowance)£0 (second job)
D040% on all earnings£0
D145% on all earnings£0
NTNo tax£0 (but tax-free)
KNegative allowance (owe from benefits)Reduces pay

Fiscal Drag — The Hidden Tax Rise

Because the Personal Allowance is frozen while wages increase with inflation:

ImpactEffect
More people pay taxThose earning near £12,570 get pushed over
More people pay higher rateThose near £50,270 get pushed into 40%
Real allowance value falls£12,570 buys less each year
Effective tax riseWithout changing headline rates

Example: Wages Rising 5%

YearSalaryAfter 5% RiseExtra Tax from Threshold Freeze
2024£12,000£12,600Now pays tax: £6
2024£50,000£52,500Extra 40% on £2,230: £892
2024£100,000£105,000Loses £2,500 allowance: +£1,000

Sources

  1. HMRC — Income Tax rates and Personal Allowances
  2. HMRC — Personal Allowance taper