Tax year: 2026/27 | Last reviewed: 2 October 2026
The Personal Allowance is the amount of income you can receive each year before paying income tax. For 2026/27 it is £12,570, and it is frozen at that level until April 2031. Because the threshold is not rising with wages, more people are paying more tax each year. Making full use of every allowance matters more than ever.
The Personal Allowance
- £12,570 for most people
- Reduced by £1 for every £2 of adjusted net income over £100,000, disappearing completely at £125,140
- Applies to all types of income: earnings, pensions, rent, savings and dividends
If your income is between £100,000 and £125,140, you face an effective 60% tax rate. Pension contributions and Gift Aid reduce adjusted net income and can restore the allowance. See income over £60,000 or £100,000.
Marriage Allowance
If one spouse or civil partner earns less than £12,570 and the other is a basic rate taxpayer, the lower earner can transfer £1,260 of their allowance, saving the couple up to £252 a year. It can be backdated four years, so a first claim can be worth over £1,000.
Other tax-free allowances for 2026/27
| Allowance | Amount |
|---|---|
| Personal Savings Allowance | £1,000 basic rate, £500 higher rate, nil additional rate |
| Starting rate for savings | Up to £5,000 if other income is low |
| Dividend allowance | £500 |
| Capital gains tax annual exempt amount | £3,000 |
| Trading allowance | £1,000 |
| Property allowance | £1,000 |
| Rent a Room relief | £7,500 |
| ISA allowance | £20,000 |
| Pension annual allowance | £60,000 |
Blind Person’s Allowance is also available to people registered blind or severely sight impaired, on top of the Personal Allowance.
Using allowances as a couple
Each person has their own allowances. Moving savings or investments into the name of a lower-earning spouse can use two sets of savings, dividend and CGT allowances. Transfers between spouses are free of CGT. For company owners, giving a spouse shares can spread dividends, but the shares need to be outright gifts with real rights, so take advice first. Read our director dividend strategy guide.
Your tax code
Employees and pensioners get their Personal Allowance through their tax code, normally 1257L. If your code is different, check why. See 1257L tax code explained.
FAQs
What is the Personal Allowance for 2026/27?
£12,570, frozen until April 2031.
Do I lose my Personal Allowance over £100,000?
It is reduced by £1 for every £2 over £100,000 and is lost entirely at £125,140.
Is the ISA allowance changing?
The overall £20,000 limit stays, but from April 2027 no more than £12,000 can go into cash ISAs for people under 65. See using ISAs to save tax.
Talk it through with Digivolve
We check every allowance is used across your household as part of your tax return, including Marriage Allowance claims and backdating.
This article is general information based on the rules for the 2026/27 tax year as at October 2026. It is not personal tax advice. Rates and thresholds can change, so please speak to us before acting.