Written and reviewed by James Whitfield · Updated for 2026/27 · Editorial standards · Methodology
The personal allowance is the income you earn before paying income tax. This guide covers the £12,570 standard allowance, when it tapers away at £100k, and how to protect it.
The UK Personal Allowance for 2026/27 is £12,570 — the income you can earn before paying income tax. It tapers away once income passes £100,000 (you lose £1 for every £2 over) and reaches zero at £125,140.
Typical default take-home figures for fast context before reading.
The personal allowance is the amount of annual income you can receive before paying income tax. For 2026/27 it is £12,570. HMRC converts this into a tax code (1257L for most employees) and your employer applies it through PAYE. The first £12,570 of your earnings each year is taxed at 0%.
The allowance accumulates through the year. In a standard cumulative PAYE arrangement, the allowance is split across 12 months (roughly £1,047.50/month). If your earnings in any month are low, the unused portion of that month's allowance carries forward, you will not lose it unless your annual income exceeds the relevant thresholds.
Changes to personal allowance happen through the tax code. If your code changes (for example, because HMRC adds a company car benefit), your effective monthly allowance changes too. This is why a code change mid-year can result in a different take-home even without a salary change.
The personal allowance tapers away at a rate of £1 for every £2 earned above £100,000. By the time salary reaches £125,140, the full personal allowance is lost. The combined effect of paying 40% higher rate tax on the extra earnings and losing the allowance creates an effective marginal rate of 60% on income between £100,000 and £125,140.
This is one of the most significant and often misunderstood features of UK tax. A £5,000 pay rise from £100,000 to £105,000 costs roughly £3,000 in additional tax, an effective rate of 60%. This same logic applies in reverse: a £5,000 pension contribution or gift aid payment by a £105,000 earner saves approximately £3,000 in tax.
Planning around this trap typically involves pension salary sacrifice contributions, gift aid donations, or other deductions that reduce adjusted net income below £100,000 and restore the full personal allowance.
Use these current tax-year figures as context while reading this article.
| Band | Gross salary range | Rate |
|---|---|---|
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £137,710 | 40% |
| Additional rate | Over £137,710 | 45% |
| Band | Gross salary range | Rate |
|---|---|---|
| Starter rate | £12,571 to £16,537 | 19% |
| Basic rate | £16,538 to £29,526 | 20% |
| Intermediate rate | £29,527 to £43,662 | 21% |
| Higher rate | £43,663 to £75,000 | 42% |
| Advanced rate | £75,001 to £137,710 | 45% |
| Top rate | Over £137,710 | 48% |
| Plan | Threshold | Rate |
|---|---|---|
| PLAN1 | £26,900 | 9% |
| PLAN2 | £29,385 | 9% |
| PLAN4 | £33,795 | 9% |
| PLAN5 | £25,000 | 9% |
| Postgraduate | £21,000 | 6% |
Yes. The examples align to current 2026/27 assumptions used by the calculator, including PAYE income tax and UK NI treatment.
Differences usually come from tax-code changes, bonus timing, benefits, multiple employments or period-level payroll adjustments.
No. Compare both monthly and annual net pay because loan plan, pension and tax-region settings can materially change outcomes.
Yes. Correct student loan plan and pension percentage are two of the biggest drivers of realistic net-pay estimates.
No. This content is informational and planning-focused, not personal financial advice.
Use official HMRC and UK government guidance for tax, NI, student loan and Scottish income tax rules.