The Personal Allowance is the amount of income you can earn each year before paying any Income Tax. For 2026/27 it is £12,570.
Published July 2026 · Updated July 2026
The Personal Allowance is a slice of income everyone can earn tax-free before Income Tax starts. For 2026/27 it is £12,570, and it has been frozen at that level for several years.
Once your income passes £100,000, the allowance shrinks by £1 for every £2 you earn above it, disappearing completely at £125,140. In that band the combination of losing the allowance and paying higher-rate tax creates an effective rate of around 60%.
Most people do, but it reduces for high earners (over £100,000) and can differ if you claim certain allowances like Marriage Allowance.
The Personal Allowance is UK-wide, but Scotland sets its own Income Tax bands above it.
Source: GOV.UK ↗. This glossary is written for small business owners, so definitions are simplified. Tax rates and thresholds reflect 2026/27 UK rules and change over time. Berified does not provide accounting, tax or legal advice; always check the source or a qualified adviser.