Personal Allowance Explained UK 2026/27: £12,570 & the 60% Trap
The Personal Allowance is the most important number in UK income tax — the slice of income you keep tax-free — yet it hides one of the system's nastiest quirks. This guide explains how it works in 2026/27: the £12,570 tax-free amount, how it is steadily withdrawn between £100,000 and £125,140 to create the notorious 60% effective tax trap, how Marriage Allowance lets a spouse transfer £1,260 of unused allowance, the extra Blind Person's Allowance, and how the allowance shows up in your tax code as 1257L. Worked examples around the £100k taper show exactly where the 60% band bites and how a pension contribution can defuse it.
The Personal Allowance is the amount of income you can receive each year before paying any income tax. For 2026/27 it is £12,570, the same frozen figure as recent years. It covers earnings, pensions and most taxable income.
Above £12,570, income is taxed at 20% up to £50,270, 40% up to £125,140, and 45% above that. Because the allowance has been frozen while wages rise, “fiscal drag” quietly pulls more people into tax and into higher bands each year. Check your position with the income tax calculator.
The £100,000 Taper
Once your adjusted net income passes £100,000, the Personal Allowance is cut by £1 for every £2 above that level. At £110,000 you have lost £5,000 of allowance; by £125,140 the whole £12,570 has gone and none of your income is tax-free.
The key phrase is adjusted net income — total income less gross personal pension contributions and Gift Aid. That is what makes the taper escapable, as we will see below.
The 60% Tax Trap
In the £100,000–£125,140 band you face a double hit: 40% tax on each extra pound, plus the loss of 50p of allowance per pound earned. That lost 50p — once tax-free — becomes taxable at 40%, adding roughly 20% on top.
The result is an effective marginal rate of about 60% on this £25,140 slice — higher than the 45% additional rate above it. It is a genuine oddity of the UK system: income taxed more harshly than at any other level.
Escaping the Trap
Because the taper uses adjusted net income, a pension contribution reduces the income figure pound for pound. Contributing enough to bring income back to £100,000 reinstates the full £12,570 allowance and removes the 60% rate — so the effective relief on money paid in from this band can exceed 60%.
Gift Aid donations work the same way, and salary sacrifice into a pension is especially efficient because it also saves National Insurance. See the salary sacrifice guide for the mechanics.
Marriage Allowance
If one spouse or civil partner does not use all of their allowance and the other is a basic-rate taxpayer, the lower earner can transfer £1,260of allowance — cutting the couple's tax by up to £252 a year.
Claims can be backdated up to four years and renew automatically until your circumstances change. Read the Marriage Allowance guide for eligibility detail.
Blind Person's Allowance
The Blind Person's Allowance is an extra tax-free amount added on top of the standard Personal Allowance for those who are registered blind (or, in Scotland and Northern Ireland, unable to do work requiring eyesight). It genuinely increases your £12,570 baseline, and any unused portion can be transferred to a spouse or civil partner. You claim it directly from HMRC.
Your Tax Code
Your tax code tells your employer how much tax-free income to give you. The standard code for the full £12,570 allowance is 1257L — the allowance divided by ten, with an L suffix.
An M or N suffix shows Marriage Allowance received or transferred; a tapered allowance above £100,000 lowers the number; and a 0T or K code can appear where there is no allowance or deductions exceed it. Check your code each year — the wrong code is a common cause of over- or under-payment. See the tax codes guide.
Worked Examples
How the Personal Allowance and the 60% band behave at different income levels in 2026/27:
Income
Personal Allowance
Effect
£50,000
£12,570 (full)
Standard bands apply
£110,000
£7,570 (£5,000 lost)
≈60% on £10k over £100k
£125,140+
£0 (fully withdrawn)
No tax-free income at all
The £110,000 earner who contributes £10,000 gross to a pension drops adjusted net income to £100,000, restores the full £12,570 allowance, and escapes the 60% band entirely — relief that can exceed 60% on the contribution. Model your own figures with the income tax calculator and the salary sacrifice calculator.
The standard Personal Allowance for 2026/27 is £12,570 — the amount of income you can receive each tax year before paying any income tax. It applies to most people across the UK and covers earnings, pensions, most taxable benefits and (after their own allowances) savings and dividend income. Income above £12,570 is taxed at the basic rate of 20% up to £50,270, then 40% up to £125,140, then 45% above that. The allowance has been frozen at £12,570 for several years, which through "fiscal drag" pulls more people into tax and higher bands as wages rise.
How is the Personal Allowance withdrawn above £100,000?
Once your adjusted net income exceeds £100,000, the Personal Allowance is reduced by £1 for every £2 of income above that level. So at £110,000 you lose £5,000 of allowance; by £125,140 the entire £12,570 allowance is gone and none of your income is tax-free. This taper is the mechanism behind the so-called "60% tax trap" — and because the allowance withdrawal is based on adjusted net income, pension contributions and Gift Aid donations can reduce the income figure used and claw the allowance back.
What is the 60% tax trap and why does it happen?
Between £100,000 and £125,140 you pay 40% income tax on each extra pound AND lose 50p of Personal Allowance for every pound earned. That lost 50p was previously tax-free but now becomes taxable at 40%, adding an extra 20% effective tax. The combined effect is an effective marginal rate of about 60% on income in this band — higher than the 45% additional rate that applies above it. It is one of the quirks of the UK system: a £25,140 slice of income that is taxed more harshly than income at any other level.
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How can I avoid the 60% tax trap?
The cleanest escape is a pension contribution, which reduces your adjusted net income pound for pound. Sacrificing or contributing enough to bring income back to £100,000 reinstates the full Personal Allowance and removes the 60% rate, so the effective relief on money paid into the pension from this band can exceed 60%. Gift Aid donations work the same way by reducing adjusted net income. Salary sacrifice into a pension is particularly efficient because it also saves National Insurance. For anyone earning just over £100,000, this is among the highest-return financial moves available.
What is the Marriage Allowance?
Marriage Allowance lets a spouse or civil partner who does not use all of their Personal Allowance transfer £1,260 of it (10% of £12,570) to their partner, provided the partner is a basic-rate taxpayer. This reduces the higher earner's tax by up to £252 a year. To qualify, the lower earner must have income below the Personal Allowance and the higher earner must be a basic-rate (not higher-rate) taxpayer. You can backdate a claim for up to four previous tax years, and the claim renews automatically once made until your circumstances change.
What is the Blind Person's Allowance?
The Blind Person's Allowance is an extra tax-free amount on top of the standard Personal Allowance for people who are registered blind (or in Scotland and Northern Ireland, unable to do work for which eyesight is essential). It is added to your Personal Allowance, increasing the income you can receive tax-free. If you cannot use all of it — for example because your income is too low — you can transfer the unused part to your spouse or civil partner, similar to Marriage Allowance. You claim it directly from HMRC, and it is one of the few allowances that genuinely increases the £12,570 baseline.
How does the Personal Allowance appear in my tax code?
Your tax code tells your employer or pension provider how much tax-free income to give you. The standard code for someone with the full £12,570 allowance and no adjustments is 1257L — the number is your allowance divided by ten. If you receive Marriage Allowance you might see an M (received) or N (transferred) suffix; if your allowance is tapered away above £100,000 the number falls, and a 0T or K code can appear where there is no allowance or where deductions exceed it. Checking your code each year ensures you are getting the right allowance.
Do I get a Personal Allowance on savings and dividend income?
The £12,570 Personal Allowance can be set against any type of income, including savings and dividends, but those also have their own separate allowances on top. In 2026/27 there is a Personal Savings Allowance (£1,000 for basic-rate taxpayers, £500 for higher-rate, nil for additional-rate) and a £500 dividend allowance. So a basic-rate taxpayer could receive the £12,570 Personal Allowance, plus £1,000 of tax-free savings interest, plus £500 of tax-free dividends — though how the Personal Allowance is allocated across income types is done in the way most beneficial to you.
Does everyone get the full Personal Allowance?
Most UK residents get the full £12,570, but there are exceptions. It is tapered away between £100,000 and £125,140 of income. Some non-residents and those claiming the remittance basis may not be entitled to it. People with more than one job or pension sometimes find their allowance is split across sources via different tax codes, which can lead to under- or over-payment if the codes are wrong. And the allowance is given per person, not per household, so it cannot be pooled except through the limited Marriage Allowance transfer.
Why does freezing the Personal Allowance increase my tax?
When the £12,570 allowance is frozen rather than rising with inflation, your pay tends to grow each year while the tax-free slice stays the same. This "fiscal drag" means a larger proportion of your income becomes taxable, and pay rises can push you across the £50,270 higher-rate threshold or towards the £100,000 taper. The effect is a stealth tax increase: your headline rates do not change, but you pay more tax in real terms because the thresholds have not kept pace with rising wages and prices.
How do pension contributions interact with the Personal Allowance taper?
The taper above £100,000 is based on adjusted net income, which is your total income less the gross amount of personal pension contributions and Gift Aid donations. So contributing to a pension directly lowers the income figure used to test the taper. A higher earner at, say, £110,000 who contributes £10,000 gross to a pension brings adjusted net income back to £100,000, fully restoring the £12,570 allowance and escaping the 60% band. This is why pension contributions are the standard recommendation for anyone caught in the £100,000–£125,140 zone.
Disclaimer:This guide reflects 2026/27 UK Personal Allowance rules. The allowance, the taper thresholds, Marriage Allowance and Blind Person's Allowance change at fiscal events, and your position depends on your total income and circumstances. Consult a qualified adviser before acting on the £100k taper, and refer to gov.uk for current rates.