What is Personal Allowance? UK Definition 2026/27
Quick Answer
The amount you can earn tax-free each year - £12,570 for 2026/27.
Definition of Personal Allowance
The Personal Allowance is the amount of income you can receive tax-free each year. For 2026/27, it's £12,570 and has been frozen at this level until at least 2028. The allowance tapers by £1 for every £2 of income above £100,000, disappearing completely at £125,140.
Personal Allowance — Key Facts for 2026/27
| 2026/27 Allowance | £12,570 |
| Taper starts | £100,000 |
| Fully lost | £125,140 |
| Frozen until | At least 2028 |
How Personal Allowance Works — Example
- 1Income: £110,000
- 2£10,000 above £100,000 threshold
- 3PA reduction: £10,000 ÷ 2 = £5,000
- 4Reduced PA: £12,570 - £5,000 = £7,570
- 5Extra tax: £5,000 × 40% = £2,000
- 6Effective rate on £100k-£110k: 60%
How Personal Allowance Affects Your Tax
The frozen Personal Allowance combined with fiscal drag means more tax over time. The 60% effective rate trap between £100,000-£125,140 makes pension contributions especially valuable for those affected.
Official HMRC Guidance on Personal Allowance
For official guidance, refer to HMRC's documentation. Tax rules can change, so always verify current rates and thresholds on gov.uk.
HMRC: Income Tax ratesFrequently Asked Questions about Personal Allowance
Related Tax Terms
Income Tax
Tax paid on your earnings, pensions, and other income at 20%, 40%, or 45%.
Tax Code
A code telling your employer how much tax-free pay you get.
Marriage Allowance
Transfer £1,260 of Personal Allowance to your spouse to save up to £252 tax.
Adjusted Net Income
Your total taxable income minus specific deductions, used to calculate allowance tapers.
Accuracy Note
This information is for guidance only and is based on 2026/27 tax year rates. Tax rules are complex and your circumstances may differ. For personal advice, consult a qualified accountant or tax adviser.