Personal Allowance is the amount of income you can usually receive in a tax year before paying Income Tax. It reduces the amount of income that is taxable through PAYE or Self Assessment.
How Personal Allowance works
Income Tax is usually calculated on income above your Personal Allowance. If your standard allowance is £12,570, the first £12,570 of income is usually tax-free, then tax is charged on taxable income above that.
In employment, your allowance is normally reflected in your tax code. For example, the common tax code 1257L broadly points to the standard £12,570 Personal Allowance.
taxable income = total income - Personal Allowance
Personal Allowance for 2026/27
For the 2026/27 tax year, the standard UK Personal Allowance is £12,570. This means you usually do not pay Income Tax on the first £12,570 of income, unless your allowance is reduced or changed by your circumstances.
Standard Personal Allowance for 2026/27.
Approximate monthly payroll equivalent.
Approximate weekly payroll equivalent.
Personal Allowance and tax codes
A tax code tells payroll how much allowance to use when calculating PAYE Income Tax. The common code 1257L usually means the standard Personal Allowance is being applied.
Tax code 1257L broadly means 1257 × 10 = £12,570 of tax-free income across the tax year.
Need a tax-code explanation?
Read the tax code glossary page for common codes like 1257L, BR and emergency codes.
Personal Allowance for high earners
Personal Allowance can reduce when adjusted net income is above £100,000. The allowance goes down by £1 for every £2 of income above £100,000. It can be reduced to zero.
| Adjusted net income | Personal Allowance effect | Simple explanation |
|---|---|---|
| Up to £100,000 | Usually full standard allowance | The standard £12,570 allowance can normally apply. |
| Above £100,000 | Allowance starts reducing | Reduced by £1 for every £2 above £100,000. |
| £125,140 or more | Allowance can be zero | The standard allowance may be fully withdrawn. |
Note: this can create a high effective tax rate in the income band where the Personal Allowance is being withdrawn.
What income can Personal Allowance apply to?
Personal Allowance can usually be set against taxable income such as employment income, pension income, trading income and some savings income. It does not mean all types of income are handled in the same way.
- Employment income: usually handled through PAYE and tax codes.
- Pension income: pension providers can also use tax codes.
- Self-employment: usually handled through Self Assessment.
- Savings and dividends: may have separate allowances or rates after Personal Allowance is considered.
Does Personal Allowance affect National Insurance?
No. Personal Allowance is for Income Tax. National Insurance uses separate thresholds and rates, so having a Personal Allowance does not mean you avoid National Insurance.
Personal Allowance
Reduces income that is subject to Income Tax.
National Insurance thresholds
Separate thresholds used to calculate employee National Insurance.
Why Personal Allowance matters
Personal Allowance matters because it affects how much Income Tax you pay and how much take-home pay you receive. It can also explain why tax codes change.
- Take-home pay: a higher allowance usually means less PAYE tax.
- Tax codes: allowances are often reflected in tax code numbers.
- High earners: the allowance can be withdrawn above £100,000.
- Multiple jobs: the allowance may be split or applied to one income source.
- Budgeting: changes to allowance or tax code can affect monthly net pay.
Calculate take-home pay with Personal Allowance
Use the take-home pay calculator to estimate salary after PAYE, National Insurance, pension and student loan deductions. If your allowance differs from the standard amount, use the custom allowance option.
Estimate take-home pay
Compare standard and custom Personal Allowance assumptions.
Personal Allowance FAQs
What is the Personal Allowance?
It is the amount of income you can usually receive in a tax year before paying Income Tax.
What is the Personal Allowance for 2026/27?
The standard Personal Allowance for 2026/27 is £12,570.
Does everyone get the full Personal Allowance?
No. It can be reduced or changed depending on income level, tax code, benefits, multiple jobs and other circumstances.
Does Personal Allowance affect National Insurance?
No. It affects Income Tax. National Insurance uses separate thresholds and rates.