The personal allowance, the income you can earn before paying income tax, is £12,570 in 2026-27, its sixth tax year without an increase since April 2021. The government confirmed this week it will not raise it, citing public finances, pointing instead to the £2 bus fare cap and the VAT cut on electricity.
TL;DR · LAST REVIEWED 22 July 2026
- The standard personal allowance is £12,570 for the 2026-27 tax year, unchanged since April 2021 and now in its sixth frozen year.
- The government has confirmed it will not increase the allowance, citing pressure on the public finances, according to reports of the Prime Minister's comments this week; it points to the £2 bus fare cap and the electricity VAT cut as alternatives.
- At the 20% basic rate, the allowance is worth £2,514 a year in tax not paid; a frozen allowance means pay rises are taxed in full, the effect known as fiscal drag.
- Above £100,000 of income, the allowance tapers away at £1 for every £2 earned, creating an effective 60% tax rate between £100,000 and £125,140.
- Marriage allowance lets one partner transfer £1,260 of their allowance to a basic-rate spouse or civil partner, worth up to £252 a year.
- The allowance can only change at a Budget through a Finance Act, so £12,570 stands at least until the next fiscal event.
Personal allowance and related figures for the 2026-27 tax year
| Standard personal allowance | £12,570 | Unchanged since April 2021 |
| Basic rate (20%) band | £12,571 to £50,270 | England, Wales and Northern Ireland; Scotland sets its own bands |
| Allowance taper begins | £100,000 | £1 lost per £2 of income above |
| Allowance fully lost | £125,140 | Effective 60% rate applies in the taper band |
| Marriage allowance transfer | £1,260 | Worth up to £252 a year to a basic-rate couple |
| Blind person's allowance | Additional amount on top | Claimed separately through HMRC |
Source: GOV.UK income tax rates and allowances, accessed July 2026
KEY FACTS
- Standard personal allowance 2026-27: £12,570, the same figure as every tax year since 2021-22
- Value at the basic rate: £12,570 at 20% is £2,514 a year of income tax not paid
- Taper: allowance falls by £1 for every £2 of income above £100,000, reaching zero at £125,140
- Marriage allowance: £1,260 transferable to a basic-rate partner, worth up to £252 a year, claimable back four tax years
- The freeze interacts with frozen higher-rate and additional-rate thresholds, pulling more earners into tax and into higher bands as wages rise
What is the personal allowance in 2026-27
The standard personal allowance is £12,570 for the 2026-27 tax year, the amount of income most people can receive before income tax is due, and it has now been held at the same level for six consecutive tax years.
The allowance sits at the bottom of the income tax system: earnings up to £12,570 are taxed at 0%, the basic rate of 20% applies from £12,571 to £50,270 in England, Wales and Northern Ireland, and higher rates above that, with Scotland setting its own bands for earned income. For most employees the allowance arrives automatically through the tax code, where 1257L is the standard code representing the full allowance. At the basic rate, the allowance is worth £2,514 a year in tax not paid, which is why changes to it are felt so widely. It was set at £12,570 in April 2021 and has not moved since, making 2026-27 the sixth tax year at the same figure, an unusually long freeze by historical standards: through most of the 2010s the allowance rose almost every year, roughly doubling between 2010 and 2021. Because the allowance is set by Parliament through a Finance Act, it can only change at a Budget, so the current figure stands at least until the next fiscal event.
Why is the personal allowance not going up
The government has confirmed it will not raise the allowance, with the Prime Minister reported this week as saying an increase would be costly and difficult given the public finances, pointing instead to the £2 bus fare cap and the VAT cut on household electricity.
An increase in the personal allowance had been floated as a possible cost of living measure, and the idea's attraction is obvious: it delivers the same cash saving to every basic-rate taxpayer and takes the lowest-paid out of income tax altogether. The obstacle is the price tag. Because the allowance applies to more than thirty million taxpayers, even a modest rise costs billions of pounds a year in forgone revenue, and the government has concluded the public finances cannot carry it. According to reports of the Prime Minister's comments this week, the plan has been dropped in favour of targeted measures: the £2 bus fare cap running through 2027 and the removal of VAT from household electricity bills from October 2026, both of which the government presents as cheaper ways of helping households. Supporters of the freeze point to those alternatives; critics argue that leaving thresholds frozen while wages rise amounts to a tax increase by stealth, since the same pay packet loses a growing share to tax each year. Both readings are arithmetically true, which is why the freeze remains one of the most contested quiet policies in the tax system.
What does the freeze actually cost taxpayers
Fiscal drag: with the allowance frozen, every pay rise is taxed in full, so the share of income taken in tax climbs each year even though no rate has changed, and workers whose pay crosses £12,570 start paying income tax for the first time.
The mechanics are simple. If the allowance rose with wages, the tax-free slice of income would keep pace with pay and the proportion of earnings taxed would stay roughly constant. When the allowance is frozen and pay rises, all of the increase lands above the threshold and is taxed at the person's marginal rate, so the effective tax burden rises without any announcement. The effect is strongest at the bottom of the income scale, where each year of rising wages pulls more part-time and lower-paid workers, including pensioners with modest incomes, above £12,570 and into income tax for the first time. It compounds across the system because the higher-rate threshold is frozen too, moving middle earners into 40% tax on the top slice of their pay. The freeze also erodes the allowance in real terms: £12,570 buys considerably less than it did in April 2021 after five years of inflation, so the tax-free amount is smaller in real purchasing power every year the figure stands still. That erosion, rather than any headline rate rise, is where most of the extra tax collected from the freeze comes from.
Who loses their personal allowance entirely
Anyone with adjusted net income above £100,000 starts losing the allowance at £1 for every £2 earned, and it disappears completely at £125,140, creating an effective 60% tax rate inside that band.
The taper is the sharpest edge in the income tax system. Between £100,000 and £125,140, each extra £100 earned is taxed at 40% and also removes £50 of tax-free allowance, which is itself then taxed at 40%: the combined effect is an effective marginal rate of 60% on income in the band, higher than the 45% additional rate that applies above £125,140. Because the taper works on adjusted net income, pension contributions and Gift Aid donations reduce the figure the test is applied to, which is why earners just above £100,000 often use pension contributions to bring themselves back under the threshold and restore the allowance. Separately, some people have their allowance adjusted rather than removed: a spouse or civil partner receiving the marriage allowance transfer has a higher allowance, the transferring partner a lower one, and untaxed income or benefits in kind can reduce the allowance through the tax code. Checking the tax code against the standard 1257L is the quickest way to see whether the full allowance is being applied.
Can couples still claim the marriage allowance
Yes: where one partner earns under £12,570 and the other pays only basic-rate tax, £1,260 of allowance can be transferred, cutting the couple's tax by up to £252 a year, with claims allowed back four tax years.
Marriage allowance is the main way a frozen allowance can still be put to better use within a household. Where one spouse or civil partner has income below the personal allowance and the other is a basic-rate taxpayer, the lower earner can transfer £1,260 of their allowance, reducing the higher earner's tax by up to £252 in the year. Claims can be backdated for up to four tax years where the couple qualified throughout, so a first-time claim can be worth as much as £1,000 or more across the backdated period, and the claim is made free of charge on GOV.UK rather than through paid claims firms, which take a cut of any refund for a service HMRC provides at no cost. The other allowance worth checking is the blind person's allowance, an additional amount on top of the personal allowance for those who qualify, which must be claimed rather than applied automatically. Neither changes the frozen headline figure, but for eligible households they are the two remaining levers that move the tax-free amount without waiting for a Budget.
RELATED GUIDES
DISCLAIMER
This article is for general information only and does not constitute tax advice. Tax treatment depends on individual circumstances and may change. Figures are for the 2026-27 tax year in England, Wales and Northern Ireland; Scottish rates and bands differ for earned income.
Frequently asked questions
What is the personal allowance for 2026-27
£12,570, unchanged since April 2021. It is the amount of income most people can receive before paying income tax, applied automatically through the standard 1257L tax code.
Is the personal allowance going up
No. The government has confirmed it will not raise the allowance, citing pressure on the public finances, and points to the £2 bus fare cap and the VAT cut on household electricity as alternative cost of living support.
What is fiscal drag
The effect of frozen tax thresholds during rising wages: pay increases are taxed in full above the frozen allowance, so the share of income taken in tax rises each year without any tax rate changing, and more people are pulled into tax and into higher bands.
Why do some people pay 60% tax
Between £100,000 and £125,140 of adjusted net income, the personal allowance tapers away at £1 per £2 earned. Combined with 40% tax, the effective marginal rate in that band is 60%, falling back to 45% once the allowance is fully lost.
How much is the marriage allowance worth
Up to £252 a year: £1,260 of allowance transferred from a low earner to a basic-rate partner. Claims can be backdated up to four tax years and are made free on GOV.UK.
SOURCES
- GOV.UK, income tax rates and personal allowances – accessed 23 July 2026
- GOV.UK, marriage allowance – accessed 23 July 2026
- HMRC, income tax rates and allowances, current and past – accessed 23 July 2026
