UK Personal Allowance (2026/27): £12,570 Tax-Free Threshold

Q What is the UK Personal Allowance for 2026/27?

£12,570 - the tax-free slice of income for 2026/27. Frozen at this level since 6 April 2021: Spring Budget 2021 set the original freeze, Autumn Statement 2022 extended it to April 2028, and Autumn Budget 2025 extended it to April 2031. The PA covers ALL forms of UK taxable income: employment salary, self-employed trading profit, pension income, rental income (after allowable expenses), savings interest and dividends. Under ITA 2007 s.25 it is set against income other than property, savings and dividend income first, and otherwise in the way that gives the greatest reduction in your tax. Because the bands are measured on income after the allowance, the £12,570 is worth tax at your top rate: £2,514 at 20%, £5,028 at 40%.

Q Why is the £100,000 PA taper called the "60% tax trap"?

Above £100,000 of "adjusted net income" the PA is withdrawn at £1 for every £2 above the threshold. The mechanic: every £1 of extra income causes £0.50 of PA to be lost, exposing £0.50 of previously tax-free income to 40% tax = £0.20 of extra tax. Combined with the direct 40% tax on the £1 itself = 60% effective marginal rate. Add 2% employee NI = 62% combined marginal rate. This is HIGHER than the 45% additional-rate band above £125,140 (47% combined with NI) - a structural quirk where a middle band has a higher marginal rate than the top band. Pension contributions, charity gift aid, and salary sacrifice all reduce ANI £-for-£ - exceptionally valuable in the £100k-£125,140 zone. See our £100k tax trap calculator for detailed math.

Q What is "adjusted net income" for PA taper purposes?

Total taxable income from all sources MINUS specific deductions. Income included: salary (gross), self-employed profit, rental income, all dividends and all savings interest (the £500 dividend allowance and the Personal Savings Allowance are nil-rate bands, not exclusions, so they do not reduce adjusted net income), pension income, foreign income. Deductible from ANI: gross personal pension contributions (including basic-rate added by provider), gift aid donations grossed up by 25%, trading losses. NOT deducted: employer pension contributions via salary sacrifice (already excluded from gross salary), employee NI, ISA contributions, EIS/SEIS investment (different relief). Salary sacrifice into pension is uniquely powerful because the sacrificed amount is excluded from gross salary BEFORE ANI is calculated - it doesn't appear on the payslip as taxable income at all. The same ANI definition is used for High Income Child Benefit Charge (HICBC) (£60k threshold) and Tax-Free Childcare (£100k cliff) - so optimising one tends to optimise all three.

Q Can I transfer my Personal Allowance to my spouse?

Yes, in part - Marriage Allowance lets you transfer £1,260 of your Personal Allowance to your spouse or civil partner, cutting their Income Tax by up to £252 a year. The recipient must not be liable above the basic rate (in Scotland, above the intermediate rate). To benefit as a couple the transferor should normally have income below £12,570, because their own allowance falls by the full £1,260 (gov.uk). It is not available for a year in which either of you claims Married Couple's Allowance (ITA 2007 s.55B(2)(d)); if either of you was born before 6 April 1935 you can choose that instead. A claim can be backdated up to 4 previous tax years. Apply at gov.uk/apply-marriage-allowance. See our UK Marriage Allowance guide for the full mechanism + Scottish rate complications.

Q What is the Blind Person's Allowance?

An ADDITIONAL £3,250 of tax-free Personal Allowance on top of the standard £12,570 - so total tax-free £15,820 for qualifying claimants. Eligibility: registered as severely sight-impaired (blind) on a local authority register in England and Wales, OR unable to perform any work for which eyesight is essential in Scotland and Northern Ireland. Unlike the standard PA, the BPA IS transferable to a spouse if unused. Uprated each year (HMRC: £2,870 in 2023/24, £3,070 in 2024/25, £3,130 in 2025/26, £3,250 in 2026/27). Apply via your Self Assessment return or by writing to HMRC with a doctor's letter / Certificate of Vision Impairment (CVI).

Q What is the Married Couple's Allowance?

Different scheme from Marriage Allowance, only available where at least one spouse was born BEFORE 6 April 1935 (so the older spouse is at least 91 in 2026/27; for marriages after 5 December 2005 the claim is made by the higher earner, who can be the younger spouse). MCA reduces your tax bill by 10% of the allowance amount, not your taxable income. 2026/27 maximum MCA = £11,700 → 10% tax reduction = £1,170/year. It is tapered towards a minimum amount once the relevant income passes an income limit (separate from the £100k Personal Allowance taper): for marriages before 5 December 2005 that is the husband's income, and after that date the income of the higher earner. Eligibility is fixed to pre-1935 births, so a steadily shrinking population qualifies. If one of you dies, or you divorce or separate, the allowance continues until the end of that tax year.

Q How does the PA work for self-employed people?

Same allowance, applied to your total taxable income via Self Assessment. Trading profit + dividends + rental + savings interest etc. all aggregated, PA applied to the total. The PA does not apply to National Insurance: Class 4 has its own £12,570 Lower Profits Limit, tested on profits alone. So with no other income, a £15,000 trading profit owes Income Tax of 20% × (£15,000 - £12,570) = £486 and Class 4 NI of 6% × (£15,000 - £12,570) = £145.80. Class 2 is no longer compulsory: with profits of £7,105 or more it is treated as paid, protecting your NI record, and below that you can choose to pay it voluntarily (gov.uk). For employees who ALSO have self-employed side income, PA is applied to total income across both - if employment uses all the PA, side-hustle income is taxed from £0 upward at marginal rate. See our side hustle tax calculator for the stacking mechanics.

Q Can non-UK residents claim the Personal Allowance?

A non-UK resident gets the PA only if they meet a condition in ITA 2007 s.56(3): for example being a UK or EEA national, resident in the Isle of Man or the Channel Islands, or a current or former Crown servant. gov.uk adds that you might also get it under the double-taxation agreement with the country you live in, and that a non-resident claims it each year on form R43. In a split year you are UK resident for the tax year, so you meet s.56(2)(a) and the allowance is the full annual amount; it is not apportioned between the two parts of the year. See our UK residence (SRT) guide for the residence test mechanics.

Q PA freeze - what is fiscal drag?

The £12,570 PA has been frozen since April 2021. Spring Budget 2021 set the original freeze to April 2026; Autumn Statement 2022 extended it to April 2028 and the Autumn Budget 2025 extended it again to April 2031. With prices rising over the freeze, the allowance is worth less in real terms each year it stays at the same cash figure, which is an argument for using salary sacrifice and Individual Savings Account (ISA) contributions to keep income tax-efficient.

Q Does the PA cover ALL UK taxes or just Income Tax?

Only Income Tax. Other UK taxes use separate thresholds: National Insurance uses Primary Threshold £12,570 for Class 1 (employees), Lower Profits Limit £12,570 for Class 4 (self-employed) - coincidentally the same figure but a SEPARATE test. Capital Gains Tax uses £3,000 Annual Exempt Amount (completely separate, doesn't interact with PA). Dividend tax uses £500 Dividend Allowance (on top of PA - so a non-taxpayer can receive £12,570 income + £500 dividend = £13,070 tax-free). Savings interest uses Personal Savings Allowance £1,000 / £500 / £0 (on top of PA, plus the £5,000 "starting rate for savings" at 0% if non-savings income is below £17,570). Property allowance £1,000 (for rental income). Trading allowance £1,000 (for self-employed income). All these allowances stack on top of the £12,570 PA. A worker with diversified income can receive £12,570 + £500 + £1,000 + £1,000 + £1,000 = £16,070 tax-free combining all the allowances.

Q How is PA applied across multiple income types?

HMRC's "tax band stacking order" under Section 16 ITA 2007: (1) Non-savings income first - salary, self-employed profit, rental income, pension income; (2) Savings income next - bank interest, gilt interest; (3) Dividend income last. PA is applied to whichever income comes first in the stack. So a £10,000 pensioner with £5,000 of dividend income: pension £10k uses £10k of PA, and the remaining £2,570 of PA covers the first £2,570 of dividends; the next £500 falls in the dividend allowance; the last £1,930 is taxed at the 10.75% basic dividend rate (£207). A higher-rate earner with £80k salary + £5k dividends: PA used entirely by salary, dividends start at higher-rate stack, £500 dividend allowance covers first £500, remaining £4,500 taxed at 35.75%.

Q Can I check my PA usage for the current tax year?

Yes via HMRC Personal Tax Account at gov.uk/personal-tax-account. Login with Government Gateway credentials. Shows: your current tax code, year-to-date pay + tax deducted from PAYE, projected end-of-year tax position, PA usage. Mid-year you can see whether your tax code reflects the correct PA - common error after job changes is being put on emergency code (1257L M1 or BR) which doesn't reflect cumulative PA. Tax code 1257L corresponds to £12,570 PA. Wrong codes: 1248L (likely company car BIK reduction), K475 (a K code: deductions such as benefits in kind exceed your allowances, so £4,750 is added to your taxable pay), BR (no PA - all income taxed at basic rate, common for second job), 0T (no PA but bands apply normally, common for emergency code on new starter), D0 (all income at higher rate, for high earners with specific arrangements). See our 1257L tax code meaning and UK emergency tax guide.