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[3], it is £12,570 for 2026/27 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 2026/27?
| 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[2]. Marriage Allowance[4] moves 10% (£1,260) 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
- 1.Income Tax rates and Personal Allowances — gov.uk — 2026/27 Personal Allowance and bands
- 2.Income over £100,000 — gov.uk — How the allowance tapers above £100,000
- 3.Income Tax Act 2007, Section 35 — legislation.gov.uk — Statutory personal allowance for those born after 5 April 1948
- 4.Marriage Allowance — gov.uk — Transferring 10% of the allowance to a spouse or civil partner
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