Personal Allowance

The personal allowance is the slice of income that the UK income-tax system treats as tax-free. For most workers it’s £12,570 (2026) — earnings below that level attract zero income tax, although National Insurance kicks in at a lower threshold and is paid separately.

Two big quirks sit on top:

• The £100,000 taper: from £100,000 of adjusted net income, the personal allowance is reduced by £1 for every £2 above the threshold. By £125,140, it’s gone entirely. This produces an effective 60% marginal income-tax rate over that £25,140 band — a stealth higher rate often missed by employees whose tax code hasn’t been updated.
• Marriage Allowance: a spouse or civil partner earning under the personal allowance can transfer up to £1,260 of unused allowance to a basic-rate partner, saving the household up to £252 in tax a year.

The personal allowance is applied through the tax code in PAYE. A code of 1257L gives the full allowance; codes like K475 mean the employee has negative allowance (e.g. a large company-car BIK) and PAYE adds the deduction to gross pay before calculating tax.

Use the PAYE calculator to see the personal allowance applied, or the self-assessment calculator for taper modelling at high incomes.