What is Personal Allowance?
The amount of income you can earn each year before paying income tax — currently £12,570.
Key Facts
- ✓ £12,570 for 2025/26 (frozen since 2021/22)
- ✓ Reduced by £1 for every £2 earned above £100,000
- ✓ Fully withdrawn at £125,140 income
- ✓ Standard tax code: 1257L
- ✓ Freeze expected to continue until at least 2027/28
Current Rates (2025/26)
- ▸ Personal Allowance: £12,570
- ▸ Taper starts: £100,000
- ▸ Fully withdrawn: £125,140
Explanation
The Personal Allowance is the amount of income you can earn in a tax year without paying any income tax. For the 2025/26 tax year it is set at £12,570. This allowance has been frozen at this level since 2021/22, with the freeze expected to last until at least 2027/28 — a policy known as fiscal drag. The Personal Allowance applies to all UK taxpayers regardless of whether they live in England, Wales, Scotland, or Northern Ireland. However, it is reduced by £1 for every £2 of income above £100,000, meaning it is completely withdrawn once income reaches £125,140. This taper creates an effective marginal tax rate of around 60% in the £100,000 to £125,140 income range. Your Personal Allowance is reflected in your tax code — the standard code 1257L represents a £12,570 allowance.
Try the calculator: Use our free calculator to see how personal allowance affects your finances.
Salary Calculator →Other Glossary Terms
The system HMRC uses to collect income tax and National Insurance directly from employees' wages.
National InsuranceA UK tax on earnings and self-employed profits that funds the state pension, NHS, and benefits.
Basic Rate (20%)The 20% income tax rate applied to taxable income between £12,571 and £50,270.
Higher Rate (40%)The 40% income tax rate applied to taxable income between £50,271 and £125,140.
Additional Rate (45%)The 45% income tax rate applied to taxable income above £125,140.
Stamp Duty Land Tax (SDLT)A tax paid when buying property or land in England and Northern Ireland.