What Is the UK’s Personal Tax Allowance?
If you earn income in the UK—whether through employment, self-employment, or other sources—you’re entitled to a Personal Tax Allowance. This is the amount of income you can earn each tax year before you have to start paying Income Tax.
How Much Is the Personal Allowance?
For the 2025/26 tax year, the standard Personal Allowance is £12,570. This means you can earn up to that amount without paying any Income Tax.
Any income above this threshold is taxed at the applicable rate:
- 20% (basic rate) on income from £12,571 to £50,270
- 40% (higher rate) from £50,271 to £125,140
- 45% (additional rate) on income over £125,140
Important Notes
- If your income is over £100,000, your Personal Allowance is gradually reduced by £1 for every £2 you earn over the limit. It reduces to zero once you earn £125,140.
- The Personal Allowance is separate from your National Insurance contributions—you may still pay NI even if you’re under the tax threshold.
- You may be eligible for additional allowances or tax reliefs, such as the Marriage Allowance, Blind Person’s Allowance, or savings allowances, depending on your situation.
Why It Matters
Understanding your Personal Allowance helps you plan your finances more effectively, estimate your take-home pay, and avoid unexpected tax bills.
In Summary
The UK’s Personal Tax Allowance is the amount of income you can earn tax-free each year. For most people, it’s £12,570—but knowing how it works can help you make smarter financial decisions and stay on top of your tax obligations.
Contact me if you have any questions.
