Personal Allowance

    Glossary

    Personal Allowance

    The Personal Allowance is the amount of income a UK taxpayer can earn each tax year before paying any Income Tax, currently £12,570 (frozen until April 2028).

    The allowance is reduced by £1 for every £2 of income above £100,000, fully eliminated once income reaches £125,140 — creating an effective 60% marginal tax rate on income between £100,000 and £125,140. The Personal Allowance applies to most types of taxable income (employment, self-employment, pensions, rental income). Married couples can transfer £1,260 of unused allowance via the Marriage Allowance.

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