The personal allowance is the amount of income you can earn each tax year before paying any Income Tax — currently £12,570, frozen until at least April 2028. It applies automatically through your tax code; most employees don't need to do anything to receive it. It shrinks once your income passes £100,000, reducing by £1 for every £2 earned above that threshold, and disappears entirely at £125,140. Married couples and civil partners can sometimes transfer part of an unused allowance between them through Marriage Allowance, worth up to £252 a year.
Almost everyone in the UK has heard of the personal allowance without necessarily knowing what it does. It's the reason your first pay packet each year doesn't have tax taken off it, the reason your tax code starts with "1257," and the reason a pay rise near £100,000 can cost you more than you'd expect. This article covers how it actually works, not just the headline number.
01 The basic mechanics
Everyone gets £12,570 of income each tax year completely free of Income Tax. It isn't a discount or a rebate — it's the first slice of your income that simply isn't taxed at all. Only income above that figure gets taxed, starting at the basic rate of 20%. The allowance applies to most types of income: salary, self-employment profit, pension income, and rental income all draw on the same £12,570 before tax starts.
02 Worked example: a standard PAYE employee
Aisha's employer applies this automatically through PAYE, spreading the £12,570 evenly across her 12 monthly payslips using her tax code. She never files anything to claim it — the tax code does the work, deducting tax only on the portion above her monthly share of the allowance.
03 Why it's frozen, and what that actually costs you
The personal allowance has been frozen at £12,570 since April 2021 and is set to stay there until at least April 2028 — seven years without an increase, while wages have risen substantially over the same period. This is a deliberate policy choice known as fiscal drag: as wages rise and the tax-free amount stays fixed, more of each pay rise becomes taxable than would have been the case if the allowance kept pace with inflation. You don't need a rate change to pay more tax; the freeze does that on its own, year after year.
04 The taper above £100,000
Once adjusted net income exceeds £100,000, the personal allowance withdraws at £1 for every £2 earned above that point. By £125,140, it's gone completely. Because the withdrawn allowance would otherwise have sheltered income from 40% tax, losing it on top of the 40% already due creates an effective marginal rate of 60% in that band — sometimes called the 60% tax trap, covered in full in our dedicated article on the subject.
| Adjusted net income | Personal allowance remaining |
|---|---|
| £100,000 or below | £12,570 (full amount) |
| £110,000 | £7,570 (tapered) |
| £125,140 or above | £0 (fully withdrawn) |
05 Marriage Allowance: transferring unused allowance
If one partner in a marriage or civil partnership earns below the personal allowance and the other is a basic-rate taxpayer, the lower earner can transfer 10% of their unused allowance — £1,260 — to their partner, worth up to £252 a year in reduced tax for the receiving partner. It's a genuinely underused relief; HMRC estimates millions of eligible couples still aren't claiming it, often simply because neither partner realises the option exists.
06 What reduces or removes your allowance
- Adjusted net income above £100,000 — tapers the allowance as covered above
- Certain benefits in kind — a company car or private medical insurance adds to your income for tax code purposes, potentially pushing you closer to the taper
- Underpaid tax from a previous year — HMRC can adjust your tax code to collect it, which looks like a reduced allowance on your payslip even though the underlying £12,570 hasn't changed
- Being non-UK resident in some circumstances — most non-residents still receive the allowance, but specific rules apply depending on residency status and any relevant double taxation agreement
07 How to check your own tax code is correct
A standard tax code of 1257L confirms you're receiving the full £12,570 allowance with no adjustments. Codes ending in different letters, starting with different numbers, or showing 0T or BR mean something different is happening — often correctly, sometimes not. Checking your tax code through your HMRC online account, or on your payslip, takes a couple of minutes and is worth doing at least once a year, particularly after a job change, a new benefit in kind, or a significant pay rise.
08 Frequently asked questions
No. It's applied automatically through your tax code for PAYE income, and automatically factored into your calculation if you file a Self Assessment return. There's no separate application or claim required for the standard allowance itself.
Most people do, but it can vary. People with adjusted net income above £100,000 have it tapered or removed entirely. People who transfer or receive Marriage Allowance have a slightly adjusted figure. A small number of specific circumstances, such as certain non-resident cases, can also affect it.
The personal allowance itself is set UK-wide by the UK government. However, Scotland sets its own Income Tax rates and bands above the personal allowance, so the amount of tax paid on income above £12,570 can differ for Scottish taxpayers even though the tax-free allowance is the same figure.
Under current government policy, it's frozen until at least April 2028. This could change at a future Budget, but no increase has been announced as of the time of writing, and freezing thresholds rather than cutting them outright has become a common way for governments to raise revenue without changing headline tax rates.
No. You only get one personal allowance in total, usually applied against your main job through your tax code, with your second job typically taxed from the first pound at the basic rate (tax code BR) unless you ask HMRC to split the allowance differently between the two.
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