What happens to the Personal Allowance above £100,000?

Your Personal Allowance is reduced by £1 for every £2 you earn above £100,000. It is completely withdrawn at £125,140. This creates an effective marginal tax rate of approximately 60%.

How long has the Personal Allowance been frozen?

The Personal Allowance has been frozen at £12,570 since the 2021/22 tax year. It is expected to remain at this level until at least 2027/28.

What is the Personal Allowance for 2025/26?

The Personal Allowance for the 2025/26 tax year is £12,570. This is the amount of income you can earn each year before you start paying any income tax. It applies to all UK taxpayers in England, Wales, Northern Ireland and Scotland.

Key facts

Amount: £12,570 per year (£1,047.50 per month)
Tax year: 6 April 2025 to 5 April 2026
Frozen since: 2021/22 (previously rose with inflation each year)
Expected freeze until: At least 2027/28
Tax code: 1257L (the most common UK tax code)

The £100,000 taper

If your adjusted net income exceeds £100,000, your Personal Allowance is reduced by £1 for every £2 of income above £100,000. This means:

£100,000 income → £12,570 Personal Allowance (full)
£110,000 income → £7,570 Personal Allowance
£120,000 income → £2,570 Personal Allowance
£125,140 income → £0 Personal Allowance (fully withdrawn)

This taper creates an effective marginal tax rate of approximately 60% (or 62% including National Insurance) in the £100,000–£125,140 income range. This is known as the 60% tax trap.

Fiscal drag

Because the Personal Allowance has been frozen since 2021/22 while wages have risen with inflation, more people are paying more tax each year without any headline tax increase. This effect is known as “fiscal drag”. In real terms, the Personal Allowance is worth significantly less than it was in 2021. The Office for Budget Responsibility estimates that the freeze will bring an additional 3.2 million people into the income tax system by 2027/28 compared to if the allowance had risen with inflation.

Marriage Allowance

If you are married or in a civil partnership and one partner earns less than £12,570, they can transfer up to £1,260 of their unused Personal Allowance to the other partner. This is called the Marriage Allowance and can save the receiving partner up to £252 per year in tax. To qualify, the receiving partner must be a basic rate taxpayer (earning less than £50,270). You can backdate a Marriage Allowance claim for up to four previous tax years, potentially saving over £1,000 in total. Apply online through HMRC at no cost.

Personal Allowance history

The Personal Allowance has increased significantly over the past two decades. In 2010/11 it was just £6,475. The coalition government raised it substantially each year, reaching £10,000 in 2014/15 and £11,500 by 2017/18. The largest jump came in 2019/20 when it rose to £12,500, before reaching the current £12,570 in 2021/22. The freeze since 2021 means that in real terms, after adjusting for inflation, the allowance is now worth significantly less than its 2021 value. When the freeze eventually ends, any increase is expected to be in line with CPI inflation.

Source: HMRC — Income Tax rates and Personal Allowances. Last updated: April 2025.