The personal allowance: your £12,570 tax-free amount

What the personal allowance is

The personal allowance is the amount of income you can receive each tax year before income tax starts. For 2025/26 it is £12,570 for most people. Your tax codecarries it — the standard code 1257L simply means “£12,570of tax-free pay this year”.

It has been frozen at £12,570since April 2021 and is due to stay frozen until April 2028. Because wages rise while the allowance doesn’t, a little more of everyone’s pay becomes taxable each year — the fiscal drag effect.

The £100,000 taper

The allowance isn’t guaranteed for everyone. Once your income passes £100,000, it’s withdrawn by £1 for every £2 you earn above that, vanishing completely at £125,140. This creates the 60% effective tax rate in that band. The taper looks at income after pension contributions, so paying into a pension can protect the allowance.

Marriage allowance can raise it

If you earn less than £12,570 and your partner is a basic-rate taxpayer, marriage allowance lets you transfer £1,257 of your unused allowance to them — worth up to £251 a year. It can be backdated up to four tax years if you were eligible but never claimed.

Other things that change it

• Taxable benefits — a company car or medical insurance is usually collected by reducing your allowance (a lower tax-code number, or a K code if the benefits exceed it).
• Underpaid tax from a previous year can be recovered the same way, lowering your allowance for the year.
• Blind Person’s Allowance adds a further tax-free amount on top for registered blind or severely sight-impaired people — claimed separately through HMRC.