UK Personal Allowance 2026/27 — £12,570 Frozen, Taper, Fiscal Drag
Reviewed by Alex Morgan · Updated April 2026 · Frozen since April 2021, frozen until April 2028
Personal Allowance vs other allowances
| Allowance | 2026/27 amount | Frozen until | What it covers |
|---|---|---|---|
| Personal Allowance | £12,570 | April 2028 | All taxable income |
| Marriage Allowance (transfer) | £1,260 | April 2028 | 10% of PA transferable to spouse/CP |
| Blind Person's Allowance | £3,070 | Indexed annually | Added to PA for registered blind individuals |
| Personal Savings Allowance — basic | £1,000 | No expiry date | Savings interest tax-free for BR |
| Personal Savings Allowance — higher | £500 | No expiry | Savings interest tax-free for HR |
| Personal Savings Allowance — additional | £0 | N/A | No PSA for additional-rate taxpayers |
| Dividend Allowance | £500 | No expiry | First £500 of dividend income tax-free |
| Trading Allowance | £1,000 | No expiry | Casual self-employment income tax-free |
| Property Allowance | £1,000 | No expiry | Casual rental income tax-free |
The £100k taper — and the 60% tax trap
For each £2 of income above £100,000, the Personal Allowance reduces by £1. The allowance reaches zero at £125,140. The interaction creates the most punitive marginal rate in the UK system:
Worked example — earning £110,000
- Income above £100k: £10,000
- PA reduction: £10,000 ÷ 2 = £5,000 lost from your PA
- Adjusted PA: £12,570 − £5,000 = £7,570
- Effect: £5,000 of income that was previously tax-free is now taxed at 40%
- Extra tax from PA loss: £5,000 × 40% = £2,000
- Standard 40% on the £10k of marginal income: £4,000
- Total tax on the £10k earned in this band: £6,000
- Effective marginal rate: 60%
The 60% trap runs the full £100k–£125,140 band — over £15,000 of income taxed at this brutal rate. Pension contributions and Gift Aid donations reduce adjusted net income for the purposes of the taper test, so a £25,000 pension contribution restores the full £12,570 PA and effectively gives 60% tax relief on contributions in this band. See our 60% tax trap explainer for the full strategy.
Fiscal drag — what the freeze actually costs you
The PA was raised steadily from £6,475 in 2010/11 to £12,500 by 2020/21. Since April 2021 it's been static at £12,570. Cumulative real-terms erosion versus inflation:
| Tax year | PA cash | Real-terms (April 2026 prices) | Erosion |
|---|---|---|---|
| 2020/21 | £12,500 | ~£15,800 | — |
| 2022/23 | £12,570 | ~£14,500 | ~10% |
| 2024/25 | £12,570 | ~£13,200 | ~17% |
| 2026/27 | £12,570 | £12,570 (base) | ~21% vs 2020 baseline |
| 2027/28 (frozen final yr) | £12,570 | ~£12,200 | ~23% projected |
OBR estimates the freeze pulls roughly 1.4 million additional taxpayers into income tax per year and pulls another 600,000 into the 40% higher rate band annually. Cumulative revenue impact by 2027/28: ~£40 billion/year — making the freeze the largest stealth tax measure in UK history. The freeze affects every working-age adult earning above the PA — whether or not they realise it.
Marriage Allowance — claim £252 if eligible
A non-taxpaying spouse or civil partner can transfer up to 10% of their PA — £1,260 — to a basic-rate-paying partner. The receiving partner saves up to £252 in income tax. Eligibility:
- Both partners married or in a civil partnership.
- Both born after 6 April 1935 (older couples use the more generous Married Couple's Allowance instead).
- One partner earns below £12,570 (or has used less than full PA against other income).
- Other partner is a basic-rate taxpayer (between £12,571 and £50,270).
- Higher- or additional-rate taxpayers don't qualify.
- Backdating: 4 tax years (so claims in 2026/27 can backdate to 2022/23) — total potential refund ~£1,260.
Apply via gov.uk → "Marriage Allowance." The receiving partner's tax code typically changes to "1383M" reflecting the additional £1,260 allowance. Many couples are eligible but never claim — a quiet government underspend of around £600 million per year.
Scotland — same PA, different bands
Scotland uses the UK Personal Allowance (£12,570) but applies its own progressive income tax bands above it (set by the Scottish Parliament). Scottish bands for 2026/27: Starter 19% (£12,571 – £15,397), Basic 20% (£15,398 – £27,491), Intermediate 21% (£27,492 – £43,662), Higher 42% (£43,663 – £75,000), Advanced 45% (£75,001 – £125,140), Top 48% (above £125,140). The Scottish 60% trap from £100k–£125,140 is more like a 67.5% effective rate (45% Advanced + PA loss). National Insurance, Capital Gains Tax, Dividend Tax remain set by Westminster — only earned-income bands are devolved.
How Personal Allowance interacts with other allowances
The order of allowances matters when you have varied income. HMRC's allocation rule:
- Personal Allowance applied first to non-savings, non-dividend income — salary, pension, rental, self-employment.
- Then to savings interest — if any PA remains.
- Then to dividends — if any PA still remains.
- Personal Savings Allowance applied next to savings interest above the PA.
- Starting rate for savings (£5,000 at 0%) only useful if non-savings income is under ~£17,570.
- Dividend Allowance applied to first £500 of dividends after PA exhausted.
For most workers with mainly salary income, this complexity is invisible — PA covers the first £12,570 and the various allowances just sit there unused. For dividend-heavy or interest-heavy income mixes (e.g. retirees living off ISA-busted portfolios + rental), the layering matters significantly.
Pair this with
- → UK 60% tax trap 2026/27 — pension contributions to escape
- → UK Marriage Allowance 2026 — claim the £252
- → UK Self Assessment 2026/27
- → UK Dividend Tax 2026/27
- → UK Pension Annual Allowance 2026/27
- → UK Take-Home Pay Calculator
- → UK Statutory Rates 2026/27 (open dataset)