Trending: The personal allowance remains frozen at £12,570 until April 2031

How the Personal Allowance Works in 2026/27

The personal allowance is the slice of income you can earn tax-free each year — £12,570 for 2026/27. It's frozen until 2031, which means as wages rise, more of your income gets taxed over time, an effect known as fiscal drag.

Last reviewed: 30 May 2026 · 2 min read

Key Facts

Personal allowance is £12,570 for 2026/27
It's frozen at this level until April 2031
It shrinks once you earn over £100,000 a year

What the allowance is

The personal allowance is the amount of income you can earn each year before income tax applies — £12,570 for 2026/27. Earn below it and you pay no income tax; earn above it and only the excess is taxed.

It's applied through your tax code (1257L for most people) so it's spread across your pay throughout the year rather than given as a lump. Most workers get the full allowance automatically.

Why the freeze matters

The allowance has been frozen at £12,570 since 2021 and is set to stay there until April 2031. While that sounds like stability, it quietly increases the tax most people pay: as wages rise with inflation, more of your income falls above the fixed threshold and gets taxed.

This is 'fiscal drag' — you pay more tax without rates officially going up. It's worth being aware of, because a pay rise may push a bigger share of your income into tax than you'd expect.

FAQ

Frequently Asked Questions

Does everyone get the full personal allowance? +

Most people do, but it's reduced if you earn over £100,000 — by £1 for every £2 above that, disappearing entirely at £125,140. Some people also have it adjusted by their tax code for things like taxable benefits or to recover previous underpaid tax. For typical earners, the full £12,570 applies.

What is fiscal drag in simple terms? +

Fiscal drag is when frozen tax thresholds quietly increase your tax as your pay rises. Because the £12,570 allowance and other thresholds don't go up with inflation, wage increases push more of your income into taxable bands, so you pay more tax even though the headline rates haven't changed.

Can I transfer my personal allowance to my partner? +

If you're married or in a civil partnership and one of you earns below the allowance, the Marriage Allowance lets you transfer up to £1,260 of unused allowance to the other, as long as they're a basic-rate taxpayer. It can save a couple a useful amount of tax each year.

Topics covered

tax personal allowance income tax

This article is for informational purposes only and does not constitute financial advice. Always do your own research or speak to a qualified financial adviser before making financial decisions.