The Personal Allowance explained
How much you can earn tax-free, and what happens to it if you earn over £100,000.
The short answer
The Personal Allowance is the amount you can earn each year before paying any income tax. For 2026/27 it is £12,570. It is the reason the first slice of your pay is tax-free. If you earn more than £100,000, the allowance shrinks, and it is gone completely at £125,140.
How the allowance works
You pay no income tax on income up to £12,570. Income above that is taxed at 20% up to £50,270 (the basic rate), 40% up to £125,140 (the higher rate) and 45% above that. Scotland uses different bands, see mygov.scot. The allowance usually shows up in your tax code as 1257L, see UK tax codes explained.
The £100,000 taper
Once your adjusted net income goes above £100,000, you lose £1 of Personal Allowance for every £2 over. Between £100,000 and £125,140 this creates an effective tax rate of about 60% on that slice of income, because you pay 40% on the income and lose allowance that would have been taxed at 40% too.
For example, at £110,000 you have lost £5,000 of allowance, so your allowance is £7,570. Paying into a pension, or giving to charity through Gift Aid, can bring your adjusted net income back down and restore some of the allowance.
Other things to know
- Your allowance is not usable against National Insurance. NI has its own thresholds, see how National Insurance works.
- Savings and dividend income have their own extra allowances, see how is savings interest taxed.
- If your partner earns less than the allowance, Marriage Allowance may save you tax.
Where to learn more
This guide is for information only and is not tax advice.