Personal Allowance 2025-26: £12,570 Tax-Free Income
The Personal Allowance is the amount of income you can earn each year without paying any income tax. For 2025-26 it is £12,570.
What Is the Personal Allowance?
The Personal Allowance is the tax-free portion of your income. You pay no income tax on the first £12,570 you earn in the 2025-26 tax year (6 April 2025 to 5 April 2026). Income above this figure is taxed at the relevant rate for your tax band.
| Tax Year | Personal Allowance |
|---|---|
| 2025-26 | £12,570 |
| 2024-25 | £12,570 |
| 2023-24 | £12,570 |
| 2022-23 | £12,570 |
| 2021-22 | £12,570 |
| 2020-21 | £12,500 |
The Personal Allowance has been frozen at £12,570 since 2021-22 and is currently scheduled to remain at this level until at least 2027-28. With wage inflation, this freeze effectively raises the tax burden over time — a process sometimes called "fiscal drag".
How the Personal Allowance Works
Your Personal Allowance is normally applied automatically through your PAYE tax code. The standard tax code for 2025-26 is 1257L, which represents £12,570 of tax-free income (the number is the allowance divided by 10).
If you have more than one job, your Personal Allowance is typically allocated to your main income. Any secondary employment income is usually taxed from the first pound using a BR (Basic Rate) or D0 (Higher Rate) tax code.
Personal Allowance Taper Above £100,000
Your Personal Allowance reduces if your adjusted net income exceeds £100,000. The taper works as follows:
- For every £2 earned above £100,000, you lose £1 of Personal Allowance.
- The allowance is completely withdrawn at £125,140.
- Above £125,140 you have no Personal Allowance — all income is taxed.
| Income | Personal Allowance | Effective Marginal Rate |
|---|---|---|
| Up to £100,000 | £12,570 | 40% (Higher rate) |
| £105,000 | £10,070 | 60% |
| £110,000 | £7,570 | 60% |
| £115,000 | £5,070 | 60% |
| £120,000 | £2,570 | 60% |
| £125,140 and above | £0 | 45% (Additional rate) |
The 60% Effective Marginal Rate Explained
Between £100,000 and £125,140, every additional £1 of income is subject to an effective marginal tax rate of 60%. This happens because:
- The £1 itself is taxed at 40% Higher rate = 40p tax
- Earning £2 extra reduces the Personal Allowance by £1. That £1 of previously untaxed income is now taxed at 40% = 20p additional tax
- Total tax on each £1 in this range: 40p + 20p = 60p
This makes the £100,000–£125,140 income range one of the most heavily taxed in the UK. Pension contributions that reduce income below £100,000 are particularly effective here — each £1 contributed saves 60p in tax.
Marriage Allowance
The Marriage Allowance allows one partner to transfer £1,260 of their unused Personal Allowance to their spouse or civil partner.
| Detail | Amount |
|---|---|
| Amount transferred | £1,260 |
| Tax saving (20% of £1,260) | £252 per year |
| Transferring partner must earn | Less than £12,570 |
| Receiving partner must be a | Basic rate taxpayer (£12,571–£50,270) |
You can apply for the Marriage Allowance at GOV.UK and claim backdated allowance for up to 4 previous tax years — a potential saving of up to £1,260 in backdated tax. See the full guide: Marriage Allowance calculator.
Blind Person's Allowance
If you are registered blind or severely sight-impaired, you can claim an additional Blind Person's Allowance of £3,070 in 2025-26. This is added to your Personal Allowance, giving a total tax-free allowance of £15,640. Like the Marriage Allowance, any unused portion can be transferred to a spouse or civil partner.
Who Does Not Get the Full Personal Allowance?
- High earners — reduced by £1 for every £2 earned above £100,000; zero at £125,140
- Non-residents — you may not be entitled to the Personal Allowance if you are not a UK resident, unless you are from a country with a double taxation treaty, or are a Crown employee or their spouse
- Those with adjusted net income above £125,140 — no Personal Allowance at all
Frequently Asked Questions
What is the Personal Allowance for 2025-26?
The Personal Allowance for 2025-26 is £12,570. This means you pay no income tax on the first £12,570 of your annual income. The standard tax code reflecting this is 1257L.
At what income does the Personal Allowance start to reduce?
The Personal Allowance starts to reduce when your adjusted net income exceeds £100,000. It is withdrawn at £1 for every £2 earned over £100,000 and is completely gone at £125,140. This creates an effective 60% marginal tax rate in that income range. Pension contributions can reduce adjusted net income and recover the allowance.
What is the Marriage Allowance and how much is it worth?
The Marriage Allowance lets you transfer £1,260 of your Personal Allowance to your spouse or civil partner, saving up to £252 per year in tax. The transferring partner must have income below £12,570, and the receiving partner must be a Basic rate taxpayer. You can backdate a claim for up to 4 years.