UK Career FAQ · 2026 Guide
What is the UK Personal Allowance 2026/27?
What it means
The personal allowance is the amount of income you can earn each tax year without paying any UK income tax. It applies to most UK income types — salary, pension, interest, etc. The allowance is currently frozen, meaning real-terms erosion of about 4% per year as inflation continues.
How it works
Your personal allowance is automatically applied via your tax code by your employer. For most UK PAYE employees with a single job, the standard 1257L code applies the full £12,570 allowance proportionally across the year. If you have multiple jobs, the allowance is allocated to one (usually the highest-paying); other jobs typically get BR code (no allowance, 20% from £1).
What to do
Check your tax code matches your situation. If single job, you should have 1257L (or regional equivalent S1257L for Scotland). Multiple jobs should have main job at 1257L and others at BR (or D0/D1 for higher earners). Married couples can use Marriage Allowance to transfer £1,260 of unused allowance — saving £252/year for couples where one earns below £12,570.
Common mistakes
Common personal allowance mistakes: (1) Failing to claim Marriage Allowance when eligible. (2) Not realising the £100k taper exists. (3) Wrong allowance allocation between multiple jobs. (4) Missing the personal allowance on rental or self-employed income. (5) Failing to claim back overpaid tax when allowance wasn't applied correctly.
Worked example
Lisa earns £105,000. Her standard personal allowance starts at £12,570 but tapers above £100k. She loses £2,500 of allowance ((£105k − £100k) ÷ 2 = £2,500), leaving an effective allowance of £10,070. The £2,500 lost personal allowance is taxed at her higher rate (40%), creating an additional £1,000 tax. Combined with the 40% higher rate on the £5k itself, her effective marginal rate on income £100k-£105k is 60%.
Recruiter pro tip
If you're earning between £100k and £125,140, salary sacrifice into pension recovers your personal allowance and saves at the 60% effective rate. A £25,140 pension sacrifice (bringing income to exactly £100k) restores the full £12,570 allowance. Worth modelling carefully — this band has the most tax-efficient marginal saving in the UK system.
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