Personal Allowance 2026/27 Explained: £12,570 Tax-Free Threshold

The personal allowance 2026/27 remains at £12,570—the amount you can typically earn before paying income tax.

The 2026/27 tax year runs from 6th April 2026 to 5th April 2027.

But with thresholds frozen until 2031, more taxpayers than ever could find themselves paying more tax than necessary.

Whether you’re employed, self-employed, or receiving a pension, understanding how your tax-free allowance 2026/27 works may help you identify opportunities to reclaim overpaid tax.

In this guide, we explore everything you need to know about the UK personal allowance 2026 2027, including how tapering affects higher earners, common situations where tax is overpaid, and steps you might take to check your entitlement to a rebate.

What Is the 2026/27 Personal Allowance?

The personal allowance represents the amount of income you can receive each tax year before income tax applies.

For the 2026/27 tax year (running from 6th April 2026 to 5th April 2027), this figure stands at £12,570.

This threshold has remained unchanged since the 2021/22 tax year and, according to government announcements, is expected to stay frozen until at least April 2031.

While this freeze provides consistency, it also means that wage increases—even modest ones—could push more of your income into taxable bands.

Key Personal Allowance Figures for 2026/27

• Standard Personal Allowance: £12,570
• Marriage Allowance Transfer: £1,260
• Blind Person’s Allowance: £3,250
• Married Couple’s Allowance (born before 6th April 1935): £11,080 maximum

How the Personal Allowance Affects Your Tax Bill

Your personal allowance directly determines how much tax you might pay. Income up to £12,570 is generally tax-free for most people.

Earnings above this threshold are then taxed according to the applicable income tax bands.

For the 2026/27 tax year, the income tax rates for England, Wales, and Northern Ireland are expected to remain as follows:

• Personal Allowance: Up to £12,570 at 0%
• Basic Rate: £12,571 to £50,270 at 20%
• Higher Rate: £50,271 to £125,140 at 40%
• Additional Rate: Over £125,140 at 45%

Note: Scottish taxpayers are subject to different income tax bands and rates, which are set by the Scottish Parliament.

A Practical Example

Consider Sarah, who earns £32,000 annually from her employment in 2026/27:

• First £12,570: No tax (personal allowance)
• Remaining £19,430: Taxed at 20% (basic rate)
• Potential income tax liability: approximately £3,886

If Sarah had expenses or allowances she hadn’t claimed, her actual tax position could differ from this calculation.

Personal Allowance Tapering: What Higher Earners Should Know

One aspect of the personal allowance that often catches taxpayers off guard is the tapering mechanism for higher earners.

If your adjusted net income exceeds £100,000, your personal allowance may be reduced.

How Tapering Works

For every £2 of income above £100,000, your personal allowance is reduced by £1. This means:

• At £100,000 income: Full £12,570 allowance
• At £112,570 income: £6,285 allowance remaining
• At £125,140 income: No personal allowance

This creates what’s sometimes called the “60% tax trap”—a band of income between £100,000 and £125,140 where the effective marginal tax rate can reach approximately 60%.

Strategies That May Help

If you earn close to these thresholds, there are legitimate approaches that could help preserve your personal allowance:

• Pension contributions: Making additional pension payments may reduce your adjusted net income
• Gift Aid donations: Charitable giving can extend your basic rate band
• Salary sacrifice arrangements: Where offered by employers, these might reduce taxable income

Always seek professional advice before making significant financial decisions.

Common Reasons for Overpaying Tax

Many UK taxpayers unknowingly pay more income tax than they should.

Understanding these common scenarios could help you identify whether you might be entitled to a rebate.

Employment-Related Overpayments

Incorrect Tax Codes

Your tax code tells your employer how much tax-free income to apply. Errors can occur when:

• You change jobs mid-year
• HMRC receives incorrect information about benefits or expenses
• Your circumstances change but your code isn’t updated

A tax code ending in “L” typically indicates the standard personal allowance (1257L for 2026/27). If your code looks different without good reason, it may be worth checking.

Work Expenses Not Claimed

Certain employees can claim tax relief on job-related expenses, including:

• Uniform cleaning and maintenance
• Professional subscriptions and fees
• Working from home costs (where applicable)
• Tools and equipment for work

If you’ve incurred these expenses but haven’t claimed relief, you could be owed money.

Multiple Income Sources

If you receive income from several sources—such as employment plus a pension, or multiple jobs—there’s potential for tax code allocations to cause over or underpayments.

HMRC attempts to distribute your personal allowance correctly, but mistakes can happen.

Self-Assessment Oversights

Self-employed individuals and those completing Self Assessment returns might overlook:

• Allowable business expenses
• Capital allowances on equipment
• The trading allowance (£1,000)
• Pension contribution tax relief

How an Incorrect Personal Allowance Costs You Money

When your personal allowance isn’t applied correctly, you could end up paying tax on income that should be tax-free. Here are the most common allowance-related issues that lead to overpayment.

Personal Allowance Not Applied

In some cases, your full £12,570 allowance may not be applied to your income. This can happen when:

• You start a new job without a P45 and get placed on a 0T code
• HMRC records show incorrect information about your circumstances
• Your allowance is mistakenly allocated to the wrong income source
• You return to work after a period abroad and your allowance isn’t reinstated

Without your personal allowance, you could pay 20% tax on the first £12,570 you earn—potentially costing you over £2,500 per year.

Tapering Miscalculations

If you earn close to £100,000, small errors in how your income is calculated could trigger incorrect tapering.

Common issues include:

• Bonus payments pushing you temporarily over the threshold
• Benefits in kind being valued incorrectly
• Pension contributions not being factored in correctly
• Multiple income sources not being aggregated properly

Because you lose £1 of allowance for every £2 earned above £100,000, even minor miscalculations could cost hundreds of pounds.

Marriage Allowance Not Claimed

If you’re married or in a civil partnership and one partner earns less than £12,570 while the other is a basic rate taxpayer, you could transfer up to £1,260 of unused allowance.

Some eligible couples don’t realise this exists or assume it’s applied automatically.

Missing out on Marriage Allowance could mean paying up to £252 more tax than necessary each year—and claims can be backdated up to four years.

Allowance Split Incorrectly Between Jobs

If you have multiple jobs or income sources, your personal allowance should be allocated appropriately. Problems arise when:

• Your full allowance is applied to a lower-paying job, leaving your main income fully taxed
• The allowance is split in a way that doesn’t reflect your actual earnings
• Both employers apply the full allowance (leading to underpayment you’ll need to repay later)

Timeframes for Claims

HMRC generally allows claims for overpaid tax going back four tax years.

This means in the 2026/27 tax year, you could potentially claim for the 2022/23, 2023/24, 2024/25, and 2025/26 tax years, as well as the current year.

How to Check If You’ve Overpaid Tax

Taking a few simple steps could help you determine whether you’re owed a tax rebate.

Step 1: Review Your Tax Code

Check your payslip or log into your Personal Tax Account on GOV.UK to view your current tax code. For most people receiving only the standard personal allowance, this should be 1257L.

Step 2: Gather Your Documents

Collect relevant paperwork, including:

• P60 forms from your employer(s)
• P45 forms from previous employment
• Payslips showing tax deducted
• Records of work-related expenses
• Evidence of professional subscriptions paid

Step 3: Consider Your Circumstances

Think about whether any of the common overpayment scenarios apply to your situation. Even small individual claims can add up over multiple years.

Step 4: Seek Professional Help

HMRC or an accountant can review your circumstances and handle the claims process on your behalf.

This can be particularly valuable if your situation is complex or you’re unsure about your entitlement.

The Impact of Frozen Thresholds

With the personal allowance frozen at £12,570 until 2031, and wages typically rising with inflation, more income is gradually falling into taxable bands—a phenomenon known as “fiscal drag.”

According to estimates from the Office for Budget Responsibility, this freeze could bring hundreds of thousands of additional people into paying income tax by 2030/31.

For those already paying tax, it may mean higher effective tax rates even without any increase in tax band percentages.

This makes it more important than ever to ensure you’re:

• Claiming all allowances and reliefs you’re entitled to
• Not paying tax on income that should be tax-free
• Aware of how your tax code is calculated

26/27 Personal Allowance Key Takeaways

Summary Box:

• The 2026/27 tax year runs from 6th April 2026 to 5th April 2027
• The personal allowance 2026/27 remains at £12,570
• This threshold is frozen until at least April 2031
• Higher earners (over £100,000) may see their allowance reduced through tapering
• Common causes of overpaid tax include incorrect tax codes, unclaimed expenses, and multiple income sources
• Claims for overpaid tax can typically go back four years
• Professional help can simplify the rebate claims process

2026/27 Personal Allowance FAQs

FAQ 1: Q: What is the personal allowance for the 2026/27 tax year? A: The personal allowance for 2026/27 (running from 6th April 2026 to 5th April 2027) is £12,570. This is the amount most people can earn before paying income tax. The allowance has been frozen at this level since 2021/22 and is expected to remain unchanged until April 2031.

FAQ 2: Q: When does the personal allowance start to reduce? A: Your personal allowance may begin to reduce if your adjusted net income exceeds £100,000. For every £2 earned above this threshold, £1 of personal allowance is typically lost. At £125,140, the personal allowance is usually fully withdrawn.

FAQ 3: Q: Can I claim back overpaid income tax? A: Yes, in many cases you can claim a tax rebate if you’ve paid too much income tax. Common reasons include incorrect tax codes, unclaimed work expenses, or changes in employment during the tax year. Claims can generally go back four tax years.

FAQ 4: Q: What tax code should I have for 2026/27? A: Most taxpayers receiving only the standard personal allowance should have tax code 1257L for the 2026/27 tax year. Different codes may apply if you have additional allowances, benefits in kind, or other adjustments. Check your code on your payslip or through your Personal Tax Account.

FAQ 5: Q: How long do I have to claim a tax rebate? A: HMRC typically allows claims for overpaid tax going back four complete tax years from the current year. This means during 2026/27, you could potentially claim for the 2022/23, 2023/24, 2024/25, and 2025/26 tax years, plus the current year.