Personal Allowance

Every individual in the UK is entitled to a Personal Allowance — the amount of income you can earn each tax year without paying Income Tax. For the 2025/26 and 2026/27 tax years, the standard Personal Allowance is £12,570. This guide explains how the allowance works, when it is reduced or withdrawn, and how you can transfer part of it to your spouse or civil partner.

How the Personal Allowance Works

The Personal Allowance is applied to your income in the following order: first against non-savings, non-dividend income (employment, self-employment, pension, rental income), then against savings income (such as bank interest), and finally against dividend income. Most people receive the full £12,570 allowance automatically through their PAYE tax code if they are employed, or through their Self Assessment calculation if they file a return. The allowance is set by the UK government and is usually announced in the annual Budget. It has been frozen at £12,570 since 2021/22 and is scheduled to remain at this level until 2027/28.

The £100,000 Taper

Once your adjusted net income exceeds £100,000 in a tax year, your Personal Allowance is reduced by £1 for every £2 of income above £100,000. This means if your income is £125,140 or more, your Personal Allowance is reduced to zero. Adjusted net income is your total taxable income minus certain reliefs (such as Gift Aid donations, pension contributions, and trading losses). For example, if your adjusted net income is £110,000, your Personal Allowance is reduced by £5,000 (£10,000 ÷ 2), leaving you with an allowance of £7,570. This creates an effective marginal tax rate of 60% on income between £100,000 and £125,140 because you pay 40% income tax plus lose £1 of your allowance (effectively another 20% tax) plus National Insurance.

Claiming Your Personal Allowance

If you are employed, your Personal Allowance is included in your tax code automatically. The standard code 1257L means you have the full £12,570 allowance. If your allowance is reduced because your income exceeds £100,000, your tax code will be reduced accordingly (for example, 757L if your allowance is £7,570). If you file a Self Assessment return, the allowance is applied as part of the tax calculation. If you have no income at all, you can still register for Self Assessment to ensure you receive any refund of tax deducted at source, but the Personal Allowance itself is not a cash payment — it merely reduces the amount of income on which you pay tax.

Transferable Marriage Allowance

If you are married or in a civil partnership, and neither you nor your partner pays Income Tax above the basic 20% rate, you can transfer up to £1,260 of your Personal Allowance to your spouse. This is known as the Marriage Allowance. The recipient must be a basic rate taxpayer (or a Scottish starter or intermediate rate taxpayer). The transfer reduces the tax bill of the higher-earning partner by up to £252 per year. You can claim backdated for up to four previous tax years, which could result in a refund of up to £1,242. You apply online at GOV.UK using your Government Gateway or by creating a new account. Once approved, the transfer continues automatically each year unless you cancel or your circumstances change. See our Marriage Allowance guide for more detail.

Blind Person's Allowance

If you are registered blind or severely sight impaired, you qualify for an additional Blind Person's Allowance on top of your Personal Allowance. For 2026/27 this is £3,090. If you are a registered blind person and your spouse or civil partner is not, you can transfer any unused Blind Person's Allowance to them. You claim this through your Self Assessment return or by contacting HMRC.

What Happens if You Have Multiple Jobs

You receive one Personal Allowance per person, not per job. If you have multiple employments, HMRC usually allocates the full allowance to your main job and uses a BR (basic rate) or D0 (higher rate) code for your second job. This ensures you do not receive the allowance twice. If both jobs use a 1257L code, you would underpay tax because you would effectively receive £25,140 of tax-free allowance. HMRC reviews this and will adjust the codes if necessary.

Need help navigating UK taxes? Browse all UK guides or try our calculators.