Personal Allowance: £12,570 | Basic rate threshold: £50,270 | Higher rate threshold: £125,140 | Additional rate: 45%
The Personal Allowance is the amount of income you can earn each tax year completely free of income tax. For 2026/27 it remains at £12,570, unchanged since 2021/22. The government has frozen it until at least 2028, meaning more people are being pulled into higher tax bands each year as wages rise — a process known as "fiscal drag".
For a typical employee, HMRC communicates your Personal Allowance through your tax code. The standard code for 2026/27 is 1257L (the allowance divided by 10, followed by L meaning standard allowance).
| Band | Income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571–£50,270 | 20% |
| Higher rate | £50,271–£125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
If your income exceeds £100,000, your Personal Allowance is reduced by £1 for every £2 you earn above that threshold. At £125,140 it disappears entirely.
This creates an effective 60% tax rate on income between £100,000 and £125,140 — you pay 40% income tax plus lose allowance worth 20% in additional tax. This is the notorious "60% tax trap".
The most common way to escape it: make pension contributions. Pension contributions reduce your adjusted net income, which can restore your Personal Allowance. See our 60% tax trap guide for full details.
If you earn below the Personal Allowance (or earn very little), you can transfer up to £1,260 of your Personal Allowance to a spouse or civil partner. This saves up to £252/yr for the couple. The recipient must be a basic rate taxpayer. Apply at gov.uk/marriage-allowance.
The standard Personal Allowance is £12,570. It has been frozen at this level since 2021/22 and remains unchanged for 2026/27.
Yes — it reduces by £1 for every £2 over £100,000 and is completely gone at £125,140, creating an effective 60% tax rate on that band of income.
You can transfer up to £1,260 of unused allowance to a spouse via Marriage Allowance, saving up to £252/yr. The recipient must be a basic rate taxpayer.