UK Income Tax Thresholds and Allowances

UK income tax thresholds determine where each band of tax starts and stops. The 2026/27 figures continue the freeze first imposed in 2021/22 and confirmed across subsequent Budgets, scheduled to end in April 2028. Because most allowances do not uplift with inflation, real-terms taxation has tightened year on year through fiscal drag.

This guide sets out each threshold, what it does, and the legislative anchor in the Income Tax Act 2007 and the annual Finance Acts. Scotland is covered separately because devolved rates differ. Welsh rates are currently identical to England and Northern Ireland.

Personal Allowance and the GBP 12,570 figure

The Personal Allowance is the amount of taxable income an individual can receive each tax year before income tax begins. For 2026/27 it is GBP 12,570, unchanged since 2021/22 and frozen until April 2028. The allowance is given through PAYE for employees via the standard 1257L tax code and is set against the highest-marginal income source where multiple are present.

Section 35 of the Income Tax Act 2007 establishes the Personal Allowance and the indexation rule that would normally uplift it with CPI; that indexation has been overridden by Finance Acts throughout the freeze period. The allowance applies to all UK residents and to non-residents who are citizens of EEA countries or have other qualifying connections under section 56.

Worked example: a part-time worker earning GBP 11,000 has zero income tax liability because all income falls within the Personal Allowance. A salaried worker on GBP 25,000 pays 20% on the GBP 12,430 above the allowance, an annual income tax bill of GBP 2,486 before NI.

Edge case: an individual with multiple jobs may have their full Personal Allowance allocated to the main job (1257L code) with the second job taxed at BR (basic rate, no allowance). HMRC adjusts the allocation through the Personal Tax Account on request, splitting the allowance between codes if useful.

Basic, higher and additional rate thresholds

Above the Personal Allowance the basic rate of 20% applies to income up to GBP 50,270 (a basic-rate band of GBP 37,700). The higher rate of 40% applies from GBP 50,271 to GBP 125,140. The additional rate of 45% applies above GBP 125,140, having been lowered from the GBP 150,000 threshold in April 2023.

Worked example: a higher-rate earner on GBP 90,000 pays 20% on GBP 37,700 (GBP 7,540) and 40% on GBP 39,730 (GBP 15,892), a total income tax bill of GBP 23,432. An additional-rate earner on GBP 200,000 loses the full Personal Allowance, pays 20% on GBP 37,700, 40% on GBP 87,440, and 45% on GBP 74,860, totalling GBP 76,109.

Scotland operates separate bands under the Scotland Act 2016. For 2025/26 the starter rate is 19% on GBP 12,571 to GBP 15,397, basic rate 20% to GBP 27,491, intermediate rate 21% to GBP 43,662, higher rate 42% to GBP 75,000, advanced rate 45% to GBP 125,140, and top rate 48% above. Scottish rates apply to non-savings non-dividend income only; savings and dividend income use the UK rates regardless of where the taxpayer lives.

Welsh Rates of Income Tax run within the UK framework. The Welsh Government can vary the rates by 10 percentage points each, but has so far matched England and Northern Ireland, producing identical effective tax for Welsh residents.

Personal Allowance taper above GBP 100,000

For taxpayers with adjusted net income above GBP 100,000 the Personal Allowance is reduced by GBP 1 for every GBP 2 of income over that threshold, under section 35(3) Income Tax Act 2007. The allowance is fully extinguished at GBP 125,140, the figure at which the taper completes (GBP 12,570 multiplied by two, added to GBP 100,000).

The effect is an effective marginal tax rate of 60% in the band between GBP 100,000 and GBP 125,140: 40% on the income itself plus the 40% loss on the GBP 1 of allowance that disappears for every GBP 2 of income. Once NI is added the total marginal rate rises to 62% on earnings in this band for employees.

Worked example: a contractor with adjusted net income of GBP 110,000 loses GBP 5,000 of Personal Allowance (half of GBP 10,000). The reduced allowance is GBP 7,570. Total taxable income is GBP 102,430. Income tax is 20% on GBP 37,700 plus 40% on GBP 64,730, totalling GBP 33,432, compared with GBP 31,432 had the full allowance applied.

Adjusted net income for this purpose is total taxable income less grossed-up Gift Aid donations and gross pension contributions. Pension contributions and Gift Aid are the standard route to manage this taper; a GBP 10,000 net pension contribution reduces adjusted net income by GBP 12,500, restoring GBP 6,250 of allowance for a high earner near the threshold.

Marriage Allowance and Blind Person's Allowance

Marriage Allowance under sections 55B to 55E Income Tax Act 2007 lets a spouse or civil partner with income below the Personal Allowance transfer GBP 1,260 of their allowance to a basic-rate earning partner. The receiving partner saves up to GBP 252 a year (20% of GBP 1,260). Both partners must be born after 5 April 1935 and the receiving partner must not be a higher or additional-rate taxpayer.

Marriage Allowance can be claimed online through the Personal Tax Account, and is backdated up to four prior tax years where the couple were married or in a civil partnership and met the income conditions in each year. The transfer continues automatically until cancelled or until circumstances change.

Blind Person's Allowance is an additional GBP 3,070 (2025/26) given on top of the Personal Allowance under section 38 Income Tax Act 2007, available to taxpayers registered as severely sight impaired in England and Wales or whose sight makes employment impractical in Scotland and Northern Ireland. Where the recipient cannot use the full allowance, the unused portion can be transferred to a spouse.

Married Couple's Allowance is available where at least one spouse was born before 6 April 1935, giving a tax reduction of up to GBP 1,108 for 2025/26 (10% of the GBP 11,080 allowance maximum, subject to taper). This is a closed cohort and shrinks each year.

Tax codes, M1/W1, and how the thresholds reach payroll

HMRC translates the Personal Allowance into a PAYE tax code issued to each employer. The standard code for 2026/27 is 1257L: 1257 representing the Personal Allowance divided by 10, and L indicating the basic Personal Allowance. Variants include K codes (allowance reduced below zero, often for taxable benefits), BR (basic rate on all income, used for second jobs), D0 (higher rate), D1 (additional rate), and 0T (no allowance, used in some emergency scenarios).

An emergency code carries M1 or W1 (month one or week one) and applies the allowance on a non-cumulative basis: the employer treats each pay period independently rather than rolling up the year-to-date position. This is common when a new employee starts without a P45 and is reconciled when HMRC issues a corrected code after receiving employer Real Time Information.

Worked example: a new starter in November 2026 without a P45 is placed on 1257L W1. The November pay runs against one-twelfth of the annual allowance regardless of any unused allowance earlier in the year. Once HMRC issues a cumulative 1257L code the next pay run automatically refunds any over-deduction through the year-to-date calculation.

Edge case: a Scottish taxpayer carries an S prefix on the tax code (S1257L), a Welsh taxpayer carries a C prefix (C1257L). HMRC applies the prefix based on the address held; a recent move that has not been notified will leave the code uncorrected and may produce a small year-end underpayment.

Frequently asked questions

Why hasn't the Personal Allowance gone up?

Because successive Finance Acts have overridden the normal indexation rule in section 57 Income Tax Act 2007. The freeze was first imposed in 2021/22 and extended in subsequent Budgets to run until April 2028. Real-terms tax has tightened each year as wages and prices rose. The Office for Budget Responsibility estimates fiscal drag will pull around 4 million additional taxpayers into higher bands by the end of the freeze period.

How does the 60% tax trap work?

Between GBP 100,000 and GBP 125,140 of adjusted net income the Personal Allowance tapers at GBP 1 per GBP 2 of extra income. The lost allowance is taxed at 40%, on top of the 40% paid on the income itself, producing an effective marginal rate of 60% in that band. NI at 2% pushes the marginal rate to 62% for employees. Gift Aid and pension contributions reduce adjusted net income and restore the allowance, which is why this band is the most actively planned around in personal tax.

Is Marriage Allowance worth claiming?

Yes for any eligible couple. A non-taxpayer with income below GBP 12,570 transfers GBP 1,260 of allowance to a basic-rate spouse, saving up to GBP 252 a year and backdated up to four tax years. The claim is online through the Personal Tax Account. The receiving partner must not be a higher-rate taxpayer, which depends on Scottish rates for residents north of the border (the equivalent test there is whether the higher rate of 42% applies).

What does a BR or D0 tax code mean?

A BR code means basic rate (20%) is applied to all income from that source, with no allowance. A D0 code applies the higher rate (40%) to all income from that source. Both are used for secondary income sources where the Personal Allowance has been allocated to a main employment. A D1 code applies the additional rate (45%). On a payslip the code dictates the rate; checking against the Personal Tax Account confirms whether the allocation matches expected income.

How does Scotland's top rate of 48% apply?

The Scottish top rate of 48% applies to non-savings non-dividend income above GBP 125,140 for taxpayers with Scottish taxpayer status under the Scotland Act 2016. Savings and dividend income are taxed at UK rates. Scottish taxpayer status applies where a person has a sole or main place of residence in Scotland for most of the tax year, or where they live in Scotland for more days than any other UK country. HMRC determines the status and issues an S-prefix tax code.