The Personal Allowance Explained: How the £12,570 Tax-Free Amount Works (2026/27)

The personal allowance is the amount of income you can earn before you start paying Income Tax. For the 2026/27 tax year it is £12,570. This guide explains how it works, who gets it, how it appears in your tax code, and the situations where it can be reduced or shared with a partner.

What is the personal allowance?

The personal allowance is a tax-free slice of income that sits at the bottom of your earnings. You only pay Income Tax on income above it. In 2026/27 that threshold is £12,570, so the first £12,570 you earn in the tax year is free of Income Tax.

It applies to most kinds of taxable income, including wages, self-employed profits, pension income and rental profits. Some income is already tax-free and sits outside this system entirely. For example, interest earned inside an ISA is tax-free and does not use up any of your personal allowance - see our ISA allowance guide for more.

Tip: think of the personal allowance as the ground floor of your income. Everything below £12,570 is tax-free; the tax only starts on the floors above it.

How you get it: tax codes and PAYE

If you are employed, you usually receive the personal allowance automatically. HMRC gives you a tax code, and for most people that code is 1257L. The numbers in the code (1257) reflect your £12,570 allowance with the final digit removed. Our guide to UK tax codes explains what each part means.

Under PAYE (Pay As You Earn), your employer spreads the allowance evenly across the year. Rather than earning £12,570 tax-free and then paying tax on everything after, your tax-free amount is divided across each pay period - roughly £1,047.50 a month or £241.73 a week - so the tax is smoothed out across your payslips.

• Employees normally get the allowance through their tax code automatically.
• Self-employed people claim it when they complete their Self Assessment tax return.
• You can usually only have one full personal allowance, even if you have more than one job.
• If your code is wrong, you may pay too much or too little tax, so it is worth checking it.

Worked examples

The simplest way to understand the personal allowance is to apply it to real figures.

Example 1 - income below the allowance. If you earn £12,000 in the year, that is below £12,570, so you pay no Income Tax at all. Your whole income is covered by the personal allowance.

Example 2 - income above the allowance. If you earn £20,000, the first £12,570 is tax-free. Only the remaining £7,430 is taxable income (£20,000 − £12,570 = £7,430). You pay Income Tax on that £7,430, not on the full £20,000. To see how the rates apply to the taxable slice, read our guide to UK Income Tax rates and bands.

You can run your own numbers with our Income Tax calculator or check your take-home pay with the salary calculator. If you work for yourself, the Self-Employed Tax Calculator applies the same personal allowance to your profits.

The high-income taper and the 60% tax trap

The personal allowance is not unlimited. Once your income gets high, it starts to shrink. It is reduced by £1 for every £2 of "adjusted net income" above £100,000. Adjusted net income is broadly your total taxable income after certain deductions such as pension contributions and Gift Aid.

By the time your adjusted net income reaches £125,140, the personal allowance has tapered all the way down to £0. Because you are both losing the allowance and paying tax on the extra income, the slice between £100,000 and £125,140 carries an effective marginal rate of 60%. This is widely known as the "60% tax trap".

This is why some people with income just over £100,000 choose to increase their pension contributions: doing so can reduce their adjusted net income and help them keep more of their personal allowance. Our pension tax relief guide explains how that works. The taper applies to your income for the whole tax year, so a bonus or one-off payment that pushes you over £100,000 can have a larger effect on your tax than the headline rate alone might suggest.

Scotland: the same personal allowance

The personal allowance is set UK-wide, so it is the same £12,570 in Scotland as in the rest of the UK. What differs in Scotland is the set of Income Tax rates and bands that apply above the personal allowance - the Scottish Parliament sets those. The tax-free amount itself, however, does not change between Scotland and the rest of the UK, so a Scottish taxpayer and an English taxpayer earning the same amount both shelter their first £12,570 from Income Tax in exactly the same way.

Sharing and boosting your allowance

There are a couple of ways the personal allowance can be moved or topped up.

Marriage Allowance

If one partner in a marriage or civil partnership does not earn enough to use all of their personal allowance, they can transfer £1,260 of it to the other partner - provided that other partner is a basic-rate taxpayer. This can reduce the couple's overall tax bill by giving the higher earner a slightly larger tax-free amount.

Blind Person's Allowance

People who are certified as blind (or severely sight impaired) may be entitled to the Blind Person's Allowance. This is an extra amount added on top of the standard personal allowance, increasing the income you can earn before paying tax. It can also be transferred to a spouse or civil partner if it cannot all be used.

Common mistakes with the personal allowance

The personal allowance is straightforward in principle, but a handful of misunderstandings cause people to pay the wrong amount of tax. Watch out for these:

• Assuming everyone gets the full £12,570. The allowance tapers away above £100,000 of adjusted net income, so high earners may get less, or none at all.
• Trying to claim it on two jobs at once. You generally only get one personal allowance, which is why a second job often carries a BR code that taxes it in full.
• Ignoring a wrong tax code. If your code does not reflect your true allowance, your take-home pay will be too high or too low. Our Tax Code Checker helps you confirm it.
• Forgetting other income counts. Savings interest, dividends and rental profits can use up your allowance just as wages do.
• Thinking unused allowance carries over. The personal allowance resets each tax year and cannot generally be banked for the future.

A combined worked example: salary plus a bonus

To see how the allowance behaves when income changes during the year, imagine someone on a steady salary who then receives a one-off bonus. Suppose their basic salary is £40,000 and they receive a £6,000 bonus, giving total income of £46,000 for the year.

1. The first £12,570 is covered by the personal allowance and is tax-free.
2. That leaves taxable income of £33,430 (£46,000 − £12,570).
3. All of that taxable income still sits within the basic-rate band, so it is taxed at the basic rate rather than the higher rate.

The key point is that the personal allowance is applied once across the whole year, not separately to the salary and the bonus. Under PAYE the allowance is spread across your pay periods, so a large bonus in a single month can briefly make a payslip look more heavily taxed before the cumulative system evens it out. To model your own salary and bonus, use our salary calculator or check the monthly figure with the Take-Home Pay Calculator.

Protecting your allowance near £100,000

Because the allowance tapers between £100,000 and £125,140, the slice of income in that range is unusually expensive - it carries the effective 60% marginal rate described above. If your income is close to £100,000, there are legitimate ways to keep more of your allowance:

• Pension contributions reduce your adjusted net income, which can restore some or all of the tapered allowance.
• Gift Aid donations are also deducted in working out adjusted net income.
• Timing a bonus across tax years, where an employer allows it, can keep a single year's income below the threshold.

The effect can be larger than the headline tax saving, because every £2 of income you bring back below £100,000 also restores £1 of tax-free allowance. If you want to see the impact in your own range, our 60% tax trap calculator shows exactly how the taper bites. Couples can also look at whether Marriage Allowance is worthwhile where one partner has unused allowance.

Frequently asked questions

What is the personal allowance for 2026/27?

The personal allowance for the 2026/27 tax year is £12,570. This is the amount of income you can earn before you start paying Income Tax.

Do I have to claim the personal allowance?

If you are employed, you normally get it automatically through your tax code (usually 1257L) under PAYE. If you are self-employed, it is applied when you complete your Self Assessment tax return. Our beginner's guide to self-employed tax walks through the process.

Why have I lost my personal allowance?

Your allowance is reduced by £1 for every £2 of adjusted net income above £100,000, and it reaches £0 at £125,140. If your income is in that range, your allowance will be partly or fully tapered away.

Is the personal allowance different in Scotland?

No. The personal allowance is £12,570 across the whole UK, including Scotland. Scotland only sets different Income Tax rates and bands above the personal allowance.

Does ISA interest use up my personal allowance?

No. Interest earned inside an ISA is tax-free and sits outside the Income Tax system, so it does not use up any of your personal allowance.

Can I share my personal allowance with my partner?

If you do not use all of your allowance, you may be able to transfer £1,260 of it to a spouse or civil partner through Marriage Allowance, as long as they are a basic-rate taxpayer.

Related calculators: Income Tax Calculator, Take-Home Pay Calculator, National Insurance Calculator and the Dividend Tax Calculator.

This guide is general information for the 2026/27 tax year, not personal tax advice. Check your own circumstances at gov.uk.

Related: the allowance arrives through your tax code; see what 1257L means.

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How long fixes take

All figures checked against HMRC published rates on 27 July 2026.