The Personal Allowance is the slice of income you can earn each tax year before paying any income tax. Set under Section 35 of the Income Tax Act 2007, it is £12,570 for 2025/26 and frozen at that level. It is the reason the standard tax code is 1257L: drop the last digit and 1257 is £12,570 of tax-free pay.
How does £12,570 become the figures on my payslip?
PAYE spreads the allowance evenly across the year so no single payday is taxed too hard. Monthly, that is £12,570 / 12 = £1,047.50 tax-free each month; weekly it is £12,570 / 52 = £241.73. Earn under the threshold and you pay no income tax at all (National Insurance can still apply). Earn above it and only the excess is taxed, starting at 20%. This even split is why your monthly tax looks steady even when your gross pay does not.
What happens above the allowance in 2025/26?
| Band | Taxable income (after allowance) | Rate |
|---|---|---|
| Personal Allowance | First £12,570 | 0% |
| Basic rate | £12,571 – £50,270 | 20% |
| Higher rate | £50,271 – £125,140 | 40% |
| Additional rate | Above £125,140 | 45% |
Can the allowance change or disappear?
Yes. Above £100,000 of income it tapers by £1 for every £2 earned, and is gone entirely by £125,140, the so-called £100k tax trap detailed in HMRC guidance. Marriage Allowance moves 10% (£1,257) to a spouse, shown by an M or N letter on the code. Emergency or 0T codes give no allowance until HMRC has your details, which is why a new starter can be overtaxed before their emergency code is corrected.
Primary sources
- Income Tax rates and Personal Allowances — gov.uk — 2025/26 Personal Allowance and bands
- Income over £100,000 — gov.uk — How the allowance tapers above £100,000
- Income Tax Act 2007, Section 35 — legislation.gov.uk — Statutory personal allowance for those born after 5 April 1948
- Marriage Allowance — gov.uk — Transferring 10% of the allowance to a spouse or civil partner
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