The personal allowance is the amount of income you can receive in a tax year before income tax is charged. For 2026 to 2027 it is £12,570, it is available to UK residents and certain non residents, and it shrinks once adjusted net income passes £100,000. Parliament has now fixed it at £12,570 for every tax year up to and including 2030 to 2031.

What is the personal allowance?

The personal allowance is set by section 35 of the Income Tax Act 2007. Section 35(1) says an individual who makes a claim is entitled to a personal allowance of £12,570 for a tax year if they meet the residence requirements in section 56. It is not a deduction from any particular source of income. It is an allowance against your total income, deducted when your income tax liability is worked out.

Two practical points follow from the way the law is written:

  • It is an annual figure. The tax year runs from 6 April to 5 April, and the allowance belongs to the year as a whole. A person who starts work in January still has the full year’s allowance to set against their income.
  • It goes where it saves most tax. Section 25(2) of the Income Tax Act 2007 says reliefs and allowances deducted at Steps 2 and 3 of the income tax calculation are set off in the way that gives the greatest reduction in your tax bill. HMRC does not simply apply the allowance to whichever income arrived first.

The allowance is a 0% band in effect. GOV.UK presents it that way in its rates table: taxable income up to £12,570 is taxed at 0% where you have the standard allowance. For how the rates above it work, see income tax rates and bands for 2026 to 2027.

Who is entitled to the personal allowance?

Section 56 sets the conditions. You qualify if you are UK resident for the tax year. If you are not UK resident, you still qualify if at any time in the tax year you:

  • are a national of the United Kingdom or of an EEA state;
  • are resident in the Isle of Man or the Channel Islands;
  • previously lived in the UK and now live abroad for the sake of your own health or that of a family member living with you;
  • are or have been employed in the service of the Crown, or are the widow, widower or surviving civil partner of someone who was; or
  • are employed in the service of a territory under the protection of the Crown or of a missionary society.

Anyone else who is not UK resident does not meet section 56. The detail is covered in the personal allowance for non residents.

What can make your allowance bigger or smaller?

£12,570 is the standard figure, but several rules move it:

  • The £100,000 taper. Under section 35(2), where adjusted net income exceeds £100,000 the allowance is reduced by one half of the excess. GOV.UK puts it as £1 lost for every £2 of income above £100,000, so the allowance is zero at £125,140 or above. That creates an effective 60% marginal rate, explained in personal allowance tapering and the 60% tax trap. Adjusted net income is defined in section 58; see adjusted net income explained.
  • Blind Person’s Allowance. This is added on top of the personal allowance. HMRC’s rates table gives £3,250 for 2026 to 2027. See Blind Person’s Allowance.
  • Marriage Allowance. A spouse or civil partner with income below their personal allowance can transfer £1,260 of it to their partner, cutting the partner’s tax by up to £252 a year. The person transferring has a smaller allowance as a result. See Marriage Allowance.
  • Tax code deductions. Where you are taxed under PAYE, HMRC reduces the tax free amount in your code to collect tax on things such as company benefits or untaxed income. Your entitlement does not change, but less of it is given through your pay.

How do you actually receive it?

Most people never claim the allowance in writing. If you are employed or receive a pension, HMRC gives it to you through your tax code. GOV.UK states that 1257L is the code currently used for most people with one job or pension: the number is the allowance with the final digit removed, and L means the standard allowance.

The code changes when HMRC takes something off. GOV.UK’s own example is a £1,570 medical insurance benefit deducted from the £12,570 allowance, leaving £11,000 and a code of 1100L. If deductions exceed the allowance, a K code is used, and GOV.UK confirms that an employer or pension provider cannot take more than half of your pre tax pay or pension when operating a K code.

If you have two jobs, the allowance is normally given against one of them and the other is taxed on a BR code, meaning all of that income is taxed at the basic rate. You can check how your allowance has been split in your HMRC online account. If you are in Self Assessment, the allowance is given in the return calculation instead. For more on the letters and numbers, see PAYE tax codes.

How long has the government frozen the personal allowance?

The personal allowance has been £12,570 since the 2021 to 2022 tax year and will stay there until 5 April 2031. The freeze was built up in three steps:

  1. Finance Act 2021, section 5 fixed the personal allowance and the basic rate limit at their 2021 to 2022 levels up to 5 April 2026.
  2. Finance Act 2023 extended that freeze up to 5 April 2028.
  3. Finance Act 2026, section 10, following the announcement at Budget 2025, amended section 5 of Finance Act 2021 so that the allowance stays at £12,570 and the basic rate limit at £37,700 for 2028 to 2029, 2029 to 2030 and 2030 to 2031.

Without these provisions, section 57 of the Income Tax Act 2007 would increase the allowance each year in line with the consumer prices index for the previous September. That default indexation is expected to apply again from 2031 to 2032, unless a future Finance Act extends the freeze. HMRC’s policy paper says the legislative default is for the thresholds to rise with CPI after 5 April 2031.

The freeze also holds other thresholds that are tied to the allowance. HMRC’s policy paper confirms that the Class 1 primary threshold and the Class 4 lower profits limit for National Insurance stay aligned with the personal allowance, and the higher rate threshold stays at £50,270, until 2030 to 2031.

Why does a frozen allowance mean paying more tax?

When wages and pensions rise but the allowance does not, a larger share of each person’s income becomes taxable. Economists call this fiscal drag. HMRC’s policy paper for the latest extension estimates that keeping the thresholds frozen will bring 700,000 more individuals into income tax by 2030 to 2031 than if they had been indexed, and forecasts the measure will raise £12,435 million in 2030 to 2031 alone.

Illustration only. Sam earns £20,000 a year and has the standard allowance.

Step Amount
Earnings £20,000
Less personal allowance £12,570
Taxable income £7,430
Tax at 20% £1,486

If Sam receives a £1,000 pay rise, the whole £1,000 is taxed at 20%, adding £200 of income tax, because none of the rise is absorbed by a higher allowance. Over several years of frozen thresholds the effect compounds.

What mistakes do people make with the personal allowance?

  • Assuming each job carries its own allowance. There is one allowance per person per year. If two jobs both give the full allowance through their codes, too little tax is deducted across the year.
  • Ignoring the taper until the tax return. A bonus or a dividend that takes adjusted net income over £100,000 reduces the allowance for the whole year, but PAYE may not reflect it in time.
  • Not checking the tax code. Out of date benefit figures or an estimate of untaxed income can leave your code wrong for months. Codes can be checked in the HMRC app or your online account.
  • Assuming non residents get nothing, or everything. Many British expatriates qualify through nationality under section 56, while some other non residents do not qualify at all.
  • Forgetting Marriage Allowance. A married couple or civil partners where one partner earns less than the allowance can save up to £252 a year by claiming it.

The current figures for other taxes are collected in UK tax rates and thresholds for 2026 to 2027.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.