The Personal Allowance is the amount of income most people can receive before they start paying Income Tax. For the 2026/27 tax year, the standard Personal Allowance is £12,570. This means that, if you qualify for the full allowance, the first £12,570 of your taxable income is generally not subject to Income Tax.
However, the Personal Allowance does not work in exactly the same way for everyone. It can be reduced if your adjusted net income is above £100,000. Your allowance can also interact with other tax allowances, multiple income sources and your tax code.
How Does the Personal Allowance Work?
The Personal Allowance forms part of the calculation used to work out your Income Tax.
The basic process is:
- Add up your taxable income for the tax year.
- Work out whether you are entitled to the full Personal Allowance.
- Deduct your Personal Allowance from your taxable income.
- Apply the relevant Income Tax rates to the remaining taxable income.
The first £12,570 of taxable income is covered by the Personal Allowance and is therefore not subject to Income Tax, where the full allowance is available.
In England, Wales and Northern Ireland, the basic Income Tax rate for 2026/27 is 20% on taxable income within the basic-rate band. Scotland has different Income Tax rates and bands for most non-savings and non-dividend income.
Example
Suppose you have taxable income of £35,000 and receive the full Personal Allowance.
Your calculation would start with:
£35,000 − £12,570 = £22,430
For England/Wales/Northern Ireland, assuming no other complications, this would actually mean £4,486 Income Tax (£22,430 × 20%).
The actual calculation can be more complicated if you have savings, dividends, pension income, benefits or other sources of income.
Who Gets the Personal Allowance?
Most people receive the standard Personal Allowance, provided their circumstances do not reduce it.
It can apply to people receiving income from:
- Employment income
- Self-employment profits
- Pension income
- Property income
- Saving income, where applicable
- Dividend and investment income, subject to the relevant rules
However, the way the allowance is used can vary depending on your circumstances.
For example, someone with two jobs does not normally receive £12,570 for each job. You generally receive one Personal Allowance for the tax year, even if you have income from several jobs, pensions or other sources.
What happens if you earn between £100,000 and £125,140?
If your adjusted net income is above £100,000, your Personal Allowance gradually reduces. For every £2 of income above £100,000, £1 of your Personal Allowance is withdrawn. This means your Personal Allowance can be reduced to zero once your income reaches £125,140.
Because the lost allowance is taxed at the 40% higher rate, the effective marginal tax rate on this portion of income can be 60%. This makes tax planning particularly important for higher earners.
Depending on your circumstances, options such as pension contributions, salary and dividend planning, and other tax-efficient strategies may help manage your adjusted net income. If you are completing a Self Assessment tax return, we can help you understand how these rules apply to your income and plan your tax position effectively.
What is adjusted net income?
Adjusted net income is broadly your total taxable income before Personal Allowances, less certain deductions and reliefs, such as qualifying pension contributions and Gift Aid. It is used to determine whether your Personal Allowance is reduced.
How Does the Personal Allowance Work for Multiple Jobs?
If you have two or more jobs, you do not normally receive a separate Personal Allowance for each job.
You generally receive one Personal Allowance for the tax year, which HMRC allocates through your tax codes.
For example, one job might use the tax code 1257L, while another job could use a code such as BR.
The BR code means the income from that source is normally taxed at the basic rate. HMRC considers your total income across your different sources when determining the appropriate tax codes.
Having multiple jobs can therefore make your tax position more difficult to understand, particularly if your income changes during the year.
How Does the Personal Allowance Work for Self-Employed People?
Self-employed people can generally receive the Personal Allowance if they are eligible.
However, Income Tax is calculated on taxable business profits, not simply the total amount of money received by the business.
For example, a self-employed person may have:
- Business income of £40,000
- Allowable business expenses of £8,000
- Taxable profit of £32,000
The Personal Allowance can then be considered when calculating their Income Tax liability.
Self-employed people also need to consider National Insurance separately because National Insurance has its own rules and thresholds.
How Does the Personal Allowance Affect Your Tax Code?
Employees normally receive their Personal Allowance through their tax code.
For 2026/27, the standard tax code for someone entitled to the full Personal Allowance is generally 1257L. Emergency versions may appear as 1257L W1, 1257L M1 or 1257L X.
The numbers in a tax code generally indicate the amount of tax-free income available to the employee. For example, 1257 multiplied by 10 gives £12,570.
However, your tax code may be different if you have:
- More than one job
- Untaxed income
- Taxable benefits
- Tax owed from an earlier year
- Other deductions or adjustments
If your circumstances change, HMRC may update your tax code.
How to Check Your Personal Allowance
You can take several steps to understand how much Personal Allowance you should receive:
- Check your total taxable income for the tax year.
- Consider all income sources, including employment, self-employment, pensions, savings and property.
- Calculate your adjusted net income if your income is around or above £100,000.
- Check your tax code if you are employed.
- Check whether you qualify for other allowances, such as Marriage Allowance.
- Review your HMRC information if your circumstances have changed.
If you have multiple income sources or a high income, calculating your allowance can become more complicated.
Conclusion
The Personal Allowance is an important part of the UK Income Tax system. For 2026/27, the standard allowance is £12,570, meaning eligible taxpayers can generally receive this amount of taxable income before paying Income Tax.
However, the full allowance is not available to everyone. If your adjusted net income exceeds £100,000, your allowance gradually reduces and reaches zero at £125,140. Multiple jobs, different income sources, pension contributions and other tax allowances can also affect your overall tax position.
Frequently Asked Questions
Does everyone get a £12,570 Personal Allowance?
No. The standard allowance is £12,570, but it can be reduced if your adjusted net income exceeds £100,000.
What happens to my Personal Allowance if I earn over £100,000?
It reduces by £1 for every £2 that your adjusted net income exceeds £100,000.
When does the Personal Allowance become zero?
The Personal Allowance is reduced to zero when adjusted net income reaches £125,140 under the current rules.
Do I get two Personal Allowances if I have two jobs?
No. You normally receive one Personal Allowance for each tax year, even if you have income from multiple jobs.
Can married couples share their Personal Allowance?
An eligible spouse or civil partner can transfer £1,260 of their unused Personal Allowance to their partner, provided the recipient is not liable to tax at the higher or additional rate.
Article Review & Sources
Reviewed by: Tushar Shaha
Last reviewed: 7 October 2026
Next review: Before the 2027/28 tax year
Sources:
- HMRC – Income Tax rates and allowances for current and previous tax years
- GOV.UK – Annex A: Rates and allowances
Tax rules and allowances can change. The information in this article is based on the guidance available at the time of review and should be considered alongside your individual circumstances.
