Personal Allowance 2025-26
The Personal Allowance is the amount of income you can earn before paying income tax. For 2025-26 it is £12,570 — frozen since 2021-22.
How the Personal Allowance works
The Personal Allowance is deducted from your gross income before calculating income tax. It applies to everyone with income below £100,000 — regardless of how you earn the income (employment, self-employment, pensions, rental income).
| Gross income | Personal Allowance used | Taxable income | Income tax (England) |
|---|---|---|---|
| £8,000 | £8,000 | £0 | £0 |
| £12,570 | £12,570 | £0 | £0 |
| £25,000 | £12,570 | £12,430 | £2,486 |
| £50,000 | £12,570 | £37,430 | £7,486 |
| £80,000 | £12,570 | £67,430 | £19,432 |
| £100,000 | £12,570 | £87,430 | £27,432 |
| £125,140+ | £0 (fully withdrawn) | £125,140 | £37,488 |
The £100k–£125k tax trap (60% effective rate)
Between £100,000 and £125,140, every £2 of extra income loses £1 of Personal Allowance. That lost allowance is then taxed at 40% (Higher Rate) — on top of the 40% you're already paying on the extra income. Together, the effective rate is 60%.
| Higher Rate tax on £2 earned | −£0.80 |
| Higher Rate tax on £1 lost PA (taxed income that was sheltered) | −£0.40 |
| Net income from £2 gross | £0.80 |
| Effective marginal tax rate | 60% |
How to escape the 60% trap
Marriage Allowance — transferring unused allowance
If one spouse or civil partner earns below the Personal Allowance, they can transfer up to £1,260 of their unused allowance to their partner — saving up to £252 per year in tax.
| Scenario | Tax saving | Condition |
|---|---|---|
| Standard Marriage Allowance transfer | £252/year | Non-taxpayer transfers £1,260 PA to Basic Rate spouse |
| Backdated (up to 4 years) | Up to £1,008 | Claim 2021-22, 2022-23, 2023-24, 2024-25 + 2025-26 |
Claim via your employer's tax code or through Self Assessment. See our Marriage Allowance calculator for a personalised figure.
Personal Allowance freeze — the stealth tax
The Personal Allowance has been frozen at £12,570 since April 2021 and is set to remain at this level until at least April 2028. With wage growth of 5-8% per year in recent years, this freeze has pushed millions of workers into income tax and into higher tax bands. The Resolution Foundation estimates the freeze is equivalent to a 6p income tax rise for average earners over the freeze period.
In real terms, the Personal Allowance is worth considerably less than in 2021 — its purchasing power has declined significantly due to high inflation. HMRC estimates an additional 3 million people will be paying income tax by 2027-28 compared to if the allowance had risen with inflation.
Who has a different Personal Allowance?
The standard Personal Allowance is £12,570. However, it can be different in several circumstances: if you have unused Marriage Allowance transferred from a spouse (up to £13,830), if HMRC has adjusted your code to account for underpaid tax (reducing your effective allowance), if you are a non-resident (allowance may still apply under a double tax treaty), or if HMRC has adjusted it for benefits in kind (such as company car tax) that your employer processes through payroll.
Frequently asked questions
What is the Personal Allowance for 2025-26?
£12,570. This is the amount you can earn without paying income tax. It applies in England, Scotland, Wales and Northern Ireland. It has been frozen at this level since 2021-22.
What happens to the Personal Allowance above £100,000?
It reduces by £1 for every £2 of income over £100,000, and is fully gone at £125,140. This creates a 60% effective marginal rate in this zone. Making pension contributions can reduce your adjusted income below £100,000 and restore the full allowance.
Does the Personal Allowance apply in Scotland?
Yes — all UK taxpayers get the same £12,570 Personal Allowance. Scotland has different rates above the Personal Allowance (starting at 19% Starter Rate rather than 20% Basic Rate), but the allowance itself is identical.
How can I increase my Personal Allowance?
If your spouse or civil partner earns less than £12,570, they can transfer up to £1,260 of their unused allowance to you via Marriage Allowance — worth up to £252/year in tax savings. You cannot otherwise increase the standard allowance beyond £12,570, but reducing your adjusted net income below £100,000 via pension contributions will protect it if it is currently being tapered.