How Much Can You Earn Tax-Free?
For the 2026/27 UK tax year, the standard Personal Allowance is £12,570. This means most people can receive up to £12,570 of income before paying Income Tax. The current tax year runs from 6 April 2026 to 5 April 2027.
That is the simple answer. The practical answer is slightly more complicated.
Not everyone gets the full Personal Allowance. Your allowance can be reduced if your income is over £100,000. It can also be affected by your tax code, employment benefits, pension income, multiple jobs, or whether you claim certain allowances or reliefs. If your income is close to a threshold, a small change can make a noticeable difference to your tax bill.
This guide explains how the Personal Allowance works, who gets it, when it is reduced, and what you should check if your tax does not look right.
What is the Personal Allowance?
The Personal Allowance is the amount of income you can usually earn before paying Income Tax.
For 2026/27, the standard Personal Allowance is £12,570. Income above the Personal Allowance is then taxed according to the relevant Income Tax bands. For taxpayers with the standard allowance, GOV.UK shows the basic rate applying from £12,571 to £50,270, the higher rate from £50,271 to £125,140, and the additional rate above £125,140.
The allowance applies to income such as employment income, self-employment profits, pension income, rental income, some state benefits, savings interest and other taxable income. HMRC’s adjusted net income guidance includes employment income, self-employment profits, most pensions, savings interest, dividends, rental income, trust income and some foreign income when explaining how taxable income is built up.
Do you always get the full £12,570?
No. Many people do, but not everyone.
You may not receive the full Personal Allowance if:
- your adjusted net income is over £100,000;
- your tax code has been reduced by HMRC;
- you receive taxable benefits through employment;
- you have underpaid tax from an earlier year being collected through PAYE;
- you have more than one job or pension;
- part of your allowance has been transferred through Marriage Allowance.
This is why it is possible for two people earning the same salary to have different tax codes and different monthly tax deductions.
The £100,000 Personal Allowance trap
The most important Personal Allowance rule for higher earners is the £100,000 taper.
Once your adjusted net income is above £100,000, your Personal Allowance is reduced by £1 for every £2 over the threshold. Once adjusted net income reaches £125,140 or above, the Personal Allowance is reduced to zero.
This creates a high effective tax rate between £100,000 and £125,140.
For example, if your adjusted net income is £110,000, you are £10,000 over the £100,000 threshold. Your Personal Allowance is reduced by £5,000, from £12,570 to £7,570.
That means you are taxed not only on the extra income, but also on income that would otherwise have been covered by your Personal Allowance.
This is why people often refer to the £100,000 to £125,140 range as a tax trap. It is not a separate tax rate, but the interaction between the 40% higher rate and the gradual withdrawal of the Personal Allowance can make the marginal cost of extra income much higher than expected.
What is adjusted net income?
Adjusted net income is not always the same as your salary.
HMRC describes adjusted net income as total taxable income before Personal Allowances, less certain tax reliefs. The deductions can include trading losses, Gift Aid donations and certain pension contributions, depending on how the contribution or relief is given.
This matters because the £100,000 test is based on adjusted net income, not simply gross salary.
For example, pension contributions or Gift Aid donations may reduce adjusted net income for this purpose. That does not mean every taxpayer should make pension contributions purely for tax reasons. It does mean people close to £100,000 should understand the calculation before assuming they have lost part of their allowance.
How your tax code connects to your Personal Allowance
If you are employed or receive pension income through PAYE, your Personal Allowance is normally reflected in your tax code.
A common tax code is 1257L, which broadly reflects the standard £12,570 Personal Allowance. However, your tax code can be different for legitimate reasons. HMRC says your employer or pension provider uses your tax code to work out how much Income Tax to deduct from pay or pension income, and HMRC tells them which code to use.
Your tax code might change because of company benefits, underpaid tax, pension income, multiple employments, or changes in your estimated income.
If your tax code looks unusual, do not assume it is wrong — but do check it. A wrong tax code can mean you pay too much tax during the year, or too little tax and face a bill later.
Personal Allowance and Marriage Allowance
If you are married or in a civil partnership, Marriage Allowance may be relevant.
Marriage Allowance lets one spouse or civil partner transfer £1,260 of their Personal Allowance to the other. GOV.UK says this can reduce the recipient’s tax by up to £252 in the tax year, provided the conditions are met.
This is usually most useful where one partner has income below the Personal Allowance and the other is a basic rate taxpayer. It is not available simply because two people live together; they must be married or in a civil partnership. GOV.UK also notes that the partner normally needs to pay basic rate tax, or starter/basic/intermediate rate if they are in Scotland.
Marriage Allowance is easy to overlook, especially where one partner works part-time, has taken time out of work, is retired, or has low taxable income.
What about Blind Person’s Allowance?
Blind Person’s Allowance is separate from the standard Personal Allowance. GOV.UK describes it as an extra amount of tax-free allowance that allows eligible people to earn more before paying Income Tax.
If this applies, it should be considered alongside the standard Personal Allowance and any other tax code adjustments.
Common Personal Allowance mistakes
The most common mistakes are not usually about the £12,570 figure itself. They are about how the allowance interacts with the rest of a person’s income.
Common issues include:
- assuming your salary is the same as adjusted net income;
- ignoring taxable benefits from employment;
- missing the £100,000 taper;
- forgetting rental income, pension income, savings interest or dividends;
- assuming a second job automatically gets another Personal Allowance;
- not checking a changed PAYE tax code;
- missing Marriage Allowance where one partner has low income.
The Personal Allowance is only one part of the calculation. The more income sources you have, the more important it becomes to check the overall position.
When should you ask an accountant to check your Personal Allowance?
You should consider getting advice if:
- your income is close to £100,000;
- you are a company director deciding salary, dividends and pension contributions;
- you have employment income and rental income;
- your tax code has changed unexpectedly;
- you have more than one job or pension;
- you are unsure whether pension contributions affect your adjusted net income;
- you have received an unexpected PAYE bill or refund.
For simple cases, GOV.UK’s guidance may be enough. For mixed-income taxpayers, higher earners and directors, the issue is often not “what is the Personal Allowance?” but “how does the Personal Allowance apply to my full tax position?”
Final point
For 2026/27, the headline Personal Allowance is £12,570. But the amount you actually benefit from depends on your income level, tax code, reliefs, benefits, pension contributions and personal circumstances.
If your income is below £100,000 and your affairs are straightforward, you will often receive the full allowance. If your income is above £100,000, or you have several income sources, it is worth checking the calculation carefully.
