UK Personal Allowance Explained — 2025/26 Guide
The personal allowance is the amount you can earn each tax year before paying any income tax. For 2025/26, it's £12,570. Understanding how it works — and how it can be reduced or transferred — is essential to knowing your true tax position.
What Is the Personal Allowance?
Income up to the personal allowance is completely free of income tax. Only income above £12,570 is subject to tax, starting at 20% (basic rate). This means a person earning exactly £12,570 pays no income tax at all.
The personal allowance is reflected in your tax code. The standard code 1257L means you have a £12,570 tax-free allowance (1257 × 10 = £12,570).
Personal Allowance — 2025/26 Impact
| Salary | Tax-Free Amount | Taxable Income | Income Tax |
|---|---|---|---|
| £10,000 | £10,000 (full) | £0 | £0 |
| £12,570 | £12,570 (full) | £0 | £0 |
| £20,000 | £12,570 | £7,430 | £1,486 |
| £30,000 | £12,570 | £17,430 | £3,486 |
| £50,000 | £12,570 | £37,430 | £7,540 (basic rate only — just under higher rate) |
The High-Income Personal Allowance Taper
If your income exceeds £100,000, your personal allowance reduces by £1 for every £2 above that threshold:
- £100,000 income: full allowance £12,570
- £110,000 income: allowance reduced by £5,000 → £7,570
- £120,000 income: allowance reduced by £10,000 → £2,570
- £125,140 income: allowance reaches zero
This taper creates an effective 60% marginal tax rate on income between £100,000 and £125,140 — you pay 40% income tax plus lose 20% worth of allowance on each extra pound.
Marriage Allowance — Transfer Up to £1,260
If you earn under £12,570 and your spouse or civil partner is a basic-rate taxpayer (£12,571–£50,270), you can transfer £1,260 of your unused personal allowance to them. This reduces their tax by £252/year.
You apply once via HMRC and the allowance is transferred each year. You can also backdate claims up to 4 years.
The Personal Allowance Freeze
The personal allowance has been frozen at £12,570 since April 2021. As wages rise with inflation, more earnings are pulled into the basic and higher rate bands — a form of "fiscal drag." By 2028, the freeze will have effectively taxed millions of additional pounds that would previously have been tax-free if the allowance had risen with inflation.
Calculate the Effect on Your Pay