Written by the TaxTune Editorial Team·Reviewed by our qualified accountants·Updated June 2026

What the personal allowance is

The personal allowance is the slice of income you can receive each year tax free before income tax applies. For 2026/27 it is 12,570 and it is frozen, meaning it does not rise with inflation. It is the same figure across the whole UK, including Scotland, because it is set at a UK level even though Scotland sets its own rates above it.

For most employed and retired people the allowance is given automatically through their tax code, usually 1257L. You only start paying income tax on income above the allowance, at which point the rates and bands take over. The allowance generally covers your main income first, with second jobs or pensions taxed at the basic rate.

The taper over 100,000

The full allowance is not available to everyone. Once your income passes 100,000, the allowance is reduced by 1 for every 2 of income above that figure. By the time income reaches 125,140, the allowance has been removed entirely.

This taper is the reason higher earners face an effective 60 percent marginal rate on income between 100,000 and 125,140. For every extra 100 earned in that band you lose 50 of allowance, and that lost allowance is taxed alongside the income itself. It is a steep cost that many people do not see coming because the headline rate at that level is only 40 percent.

A worked example

Worked example

Losing part of the allowance at 110,000

Sara earns 110,000 in 2026/27. Her income is 10,000 above the 100,000 threshold. Because the allowance falls by 1 for every 2 above the threshold, she loses 5,000 of her personal allowance. That leaves her with 7,570 of allowance instead of the full 12,570. The 5,000 of allowance she has lost is now taxed at 40 percent, costing an extra 2,000 on top of the tax on her actual earnings. If she made a pension contribution that reduced her income for this purpose back towards 100,000, she could restore some of the lost allowance.

You can model different income levels with our tax calculators to see how the taper bites.

Sharing the allowance with Marriage Allowance

If you do not use all of your allowance, you may be able to pass part of it to your spouse or civil partner. The Marriage Allowance lets a non taxpayer transfer 1,260 of their personal allowance to a basic rate paying spouse or civil partner. This can reduce the couple's tax bill by up to 252 for the year.

It works best where one partner earns below the personal allowance and the other is a basic rate taxpayer. The higher earner must not be paying at the higher or additional rate. It is a simple, often overlooked saving that many eligible couples never claim.

Making the most of your allowance

For most people the allowance looks after itself through PAYE, but a few situations call for action. If your income is near 100,000, planning ahead can protect the allowance, since pension contributions and Gift Aid donations reduce the income figure used for the taper. If you are part of a couple with one low earner, the Marriage Allowance may be worth claiming.

If you have several income sources or income that is not taxed at source, make sure your allowance is being applied correctly and report what you need to through careful planning. To review your own position, start your quote and we can check it for you.

In short

What the personal allowance is, how the taper works and how to make the most of it.

Frequently asked questions

How much is the personal allowance for 2026/27?
The personal allowance is 12,570 for 2026/27 and it is frozen, so it does not rise with inflation. It is the amount of income you can receive before income tax applies, and it is the same across the whole UK.
Why have I lost my personal allowance?
If your income is above 100,000, the allowance is tapered away by 1 for every 2 of income over that threshold, and it disappears entirely at 125,140. This is why high earners can find they have little or no allowance left and face an effective 60 percent rate on part of their income.
Can pension contributions restore my allowance?
Yes, in many cases. Pension contributions and Gift Aid donations reduce the income figure used to work out the taper, so they can bring your income back below or closer to 100,000 and restore some or all of the lost allowance. The timing matters, so it is best to plan before the year end.
What is the Marriage Allowance?
The Marriage Allowance lets a non taxpayer transfer 1,260 of their personal allowance to a basic rate paying spouse or civil partner, saving the couple up to 252 a year. It suits couples where one partner earns below the allowance and the other is a basic rate taxpayer.
Does everyone get the personal allowance?
Most people resident in the UK get the full allowance. It is reduced for those with income above 100,000 and removed entirely above 125,140. Your residence status and the source of your income can also affect entitlement, so it is worth checking if your situation is unusual.
Is the personal allowance the same in Scotland?
Yes. The personal allowance of 12,570 is set UK wide and applies in Scotland as well. What differs in Scotland is the rates and bands that apply to income above the allowance, which the Scottish Parliament sets separately.