For the 2026–27 tax year (6 April 2026 to 5 April 2027), the standard UK Personal Allowance is £12,570. It is the amount of income on which you do not pay Income Tax, provided you have the full allowance. The allowance starts to shrink when your adjusted net income is above £100,000—not simply when your salary or one payslip exceeds that amount—and reaches zero at £125,140. The calculation can include pensions, Gift Aid, benefits and income from several sources.
What is the Personal Allowance?
Your Personal Allowance is the amount of income you can receive before Income Tax is charged. For 2026–27, the standard amount is £12,570, covering 6 April 2026 through 5 April 2027. HM Revenue & Customs (HMRC) applies the allowance to your taxable income before the relevant tax rates and bands are applied. You pay Income Tax on taxable income that remains above your available allowances.
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The allowance is not a separate payment and it does not remove National Insurance, student-loan deductions or other liabilities. It is part of the Income Tax calculation. The rates and bands used after the allowance depend on the UK nation in which you are taxed; Scotland has different Income Tax bands from England, Wales and Northern Ireland. HMRC’s current rates and allowances page sets out the applicable bands and rates: Income Tax rates and Personal Allowances.
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Tax-year dates matter
UK Income Tax years run from 6 April to the following 5 April. Always attach the allowance and the taper threshold to a tax year rather than treating them as permanent calendar-year figures. The standard allowance is also £12,570 for 2025–26. Finance Act 2023 extended the £12,570 allowance and the £37,700 basic-rate limit through 2027–28, although later legislation could change the position: Finance Act 2023, section 5.
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When does the Personal Allowance get reduced?
The taper begins when your adjusted net income is above £100,000 in the relevant tax year. HMRC states the rule plainly: “Your personal allowance goes down by £1 for every £2 that your adjusted net income is above £100,000.” The reduction applies regardless of your age or whether the income comes from employment, self-employment, investments or several sources. See HMRC’s current figures at Income Tax rates and Personal Allowances.
For 2026–27, the calculation using the standard allowance is:
Available standard allowance = £12,570 − (adjusted net income − £100,000) ÷ 2
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The income levels to remember for 2026–27
| Adjusted net income (2026–27) | Effect on the standard allowance | Standard allowance remaining |
|---|---|---|
| £100,000 or less | No taper | £12,570 |
| £110,000 | Excess of £10,000; £5,000 reduction | £7,570 |
| £125,140 | Excess of £25,140; £12,570 reduction | £0 |
| £125,140 or more | The standard allowance is fully withdrawn | £0 |
At exactly £100,000, there is no reduction. At £100,001, the £1 excess produces a 50p reduction, which the statutory rounding rule makes a £1 reduction. Your exact tax calculation still depends on the rest of your income, tax bands and any other reliefs.
Why the taper can increase the marginal tax burden
Between £100,000 and £125,140, each additional £2 of adjusted net income has two effects: it adds £2 to income considered for tax and removes £1 of Personal Allowance. That makes an extra slice of income taxable that would otherwise have been covered by the allowance. The precise Income Tax rate on the additional taxable amount depends on your applicable band and nation, so the taper should not be described as one universal marginal tax rate. Scottish Income Tax bands differ, and National Insurance and other taxes are separate calculations.
The taper concerns the availability of the allowance; it does not replace the ordinary tax bands. Once the standard allowance has reached zero, further adjusted net income does not remove a second standard allowance—you simply continue without that allowance.
Adjusted net income: the figure HMRC uses
Adjusted net income is not the same as your annual salary, your gross pay on one payslip or the amount deposited in your bank account. HMRC starts with your total taxable income before Personal Allowances, then subtracts specified reliefs. The detailed method is in HMRC’s adjusted net income guidance.
Step 1: add taxable income before Personal Allowances
Depending on your circumstances, the starting total can include:
- Employment earnings, including taxable benefits from your job.
- Profits from self-employment or a partnership.
- Most pensions and some state benefits.
- Bank or building-society interest and other taxable savings income.
- Dividends.
- Some rental income.
- Income from trusts and foreign income.
Use the taxable amount for each source, not simply the cash you received. For a business, that normally means the taxable profit after allowable business expenses; for employment, taxable benefits can matter even though they are not salary.
Step 2: subtract reliefs HMRC permits
HMRC’s calculation can deduct specified items such as qualifying trading losses, grossed-up Gift Aid donations and qualifying gross pension contributions. Some payments, including certain trade-union or police-organisation subscriptions, have a specific add-back treatment in HMRC’s method. The full guidance should be followed where more than one relief or income source is involved.
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Do pension contributions reduce adjusted net income?
They can, but the treatment depends on the pension arrangement. Do not enter every payroll deduction in the same way. HMRC’s relief-at-source method treats the amount paid by the individual as a net contribution and deducts the grossed-up amount for adjusted net income purposes. Other workplace arrangements, such as contributions taken before tax under a different payroll method, are accounted for differently in the underlying income calculation.
For a qualifying relief-at-source contribution, HMRC’s guidance uses a 20% basic-rate top-up: each £1 you pay represents £1.25 for the calculation. Thus, a £8,000 net personal contribution is treated as £10,000 when determining the relevant deduction. Confirm the arrangement and figures with your pension provider, payroll records or Self Assessment calculation rather than assuming the amount shown on a payslip is the deductible figure.
How Gift Aid affects the calculation
Gift Aid donations are also deducted at their grossed-up value. HMRC explains that each £1 donated through Gift Aid represents £1.25 for the adjusted net income calculation. A £4,000 net Gift Aid donation therefore corresponds to a £5,000 deduction. Keep records of the donations and make sure you were liable for enough UK tax to support the Gift Aid declaration; the adjusted-net-income deduction does not change the separate Gift Aid eligibility rules.
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Pension contributions and Gift Aid can therefore reduce the income figure used for the Personal Allowance taper, but only to the extent the payment qualifies under HMRC’s rules and is included in the correct tax year.
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HMRC’s worked example
HMRC gives the following example. Bill has £115,000 of taxable income and makes £10,000 of private pension contributions without tax relief. HMRC’s calculation produces net income and adjusted net income of £105,000, rather than £115,000. That £105,000 figure is then used for the Personal Allowance calculation. This is HMRC’s example; the result for another person depends on the type of pension contribution and all other income and reliefs.
Applying the 2026–27 taper to £105,000 would mean a £5,000 excess over £100,000, a £2,500 reduction and a remaining standard allowance of £10,070. The example demonstrates why starting with salary alone can give the wrong answer.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.A practical method for calculating your allowance
- Identify the tax year. For the figures in this article, use 6 April 2026 to 5 April 2027.
- List every taxable income source. Include employment pay and benefits, self-employment profits, pensions, taxable benefits, savings interest, dividends, rental income, trust income and relevant foreign income.
- Calculate total taxable income before Personal Allowances. Do not subtract the Personal Allowance at this stage.
- Identify qualifying deductions. Check trading losses, grossed-up Gift Aid, gross pension contributions and any other relief HMRC lists for your circumstances.
- Calculate adjusted net income. Subtract the permitted reliefs, applying the correct treatment for the pension arrangement and any specific add-backs.
- Compare the result with £100,000. If it is no more than £100,000, the standard allowance remains £12,570 for 2026–27. If it is higher, calculate half of the excess and apply the statutory rounding-up rule for a fractional pound.
- Cap the result at zero. At adjusted net income of £125,140 or more, no standard Personal Allowance remains.
- Continue the ordinary tax calculation. Apply the relevant Income Tax bands for England, Wales, Northern Ireland or Scotland to the income left after allowances. The allowance calculation does not by itself determine your final bill.
What counts as “how much can I earn”?
There is no single salary number that answers this question for everyone. The taper threshold is based on adjusted net income, so salary is only one possible component. A person earning £100,000 of salary with no other taxable income or qualifying deductions will generally be at the threshold. Someone with £90,000 of salary plus taxable benefits, dividends or savings interest may exceed it. Conversely, eligible pension contributions or Gift Aid can reduce adjusted net income below the level suggested by gross income.
Use the adjusted-net-income figure for the complete tax year, not one month’s payslip. If your pay, bonus, benefits or investment income changes during the year, recalculate using the updated annual figures.
Blind Person’s Allowance is separate
Eligible people can claim Blind Person’s Allowance in addition to the standard Personal Allowance. The amount is £3,250 for 2026–27 and £3,130 for 2025–26, according to HMRC’s Blind Person’s Allowance guidance.
Eligibility, residence and claim requirements apply. A medical diagnosis alone should not be treated as automatic entitlement; HMRC’s eligibility and claim rules determine whether the allowance is available and how it can be claimed. The blind allowance is an additional allowance, so assess it separately from the standard £12,570 and the standard allowance taper.
Common mistakes and how to avoid them
- Using gross salary as the final test. Add all taxable income and subtract only qualifying reliefs to obtain adjusted net income.
- Using the calendar year. UK tax years run from 6 April to 5 April, so split income and reliefs correctly when figures cross 5 April.
- Subtracting the cash pension payment rather than the grossed-up amount. Relief-at-source contributions are grossed up under HMRC’s method; other schemes may not be.
- Ignoring taxable benefits. Benefits provided by an employer can increase adjusted net income even when they do not appear as salary.
- Assuming all pension contributions work identically. Check whether the contribution was relief at source, deducted before tax or handled through another arrangement.
- Forgetting rounding. A fractional-pound reduction is rounded up under the statutory rule.
- Applying English tax bands to a Scottish taxpayer. The Personal Allowance rules are UK-wide, but Scottish Income Tax bands differ.
- Assuming the figures are permanent. Check HMRC’s current rates and allowances for the tax year you are calculating.
Key figures and decisions at a glance
| Question | 2026–27 answer | What to check |
|---|---|---|
| What is the standard Personal Allowance? | £12,570 | Whether you qualify for the full standard amount or an additional allowance |
| When does the taper start? | Adjusted net income above £100,000 | All taxable income sources and qualifying reliefs |
| How quickly does it fall? | £1 for every £2 of excess, with fractional reductions rounded up | The exact adjusted-net-income figure for the tax year |
| When is the standard allowance gone? | Adjusted net income of £125,140 or more | Whether a separate allowance, such as Blind Person’s Allowance, applies |
| What additional allowance is listed for eligible blind people? | £3,250 | HMRC eligibility and claim requirements |
Where to verify your figures
Use HMRC’s Income Tax rates and Personal Allowances for the current allowance, threshold and tax bands; adjusted net income guidance for the detailed income-and-relief calculation; and the statutory rule in Income Tax Act 2007, section 35 for the taper and rounding. Check the Blind Person’s Allowance page if that additional allowance may apply. Because rates and allowances can be changed by later legislation, verify the official pages whenever you use this calculation for a later tax year.
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