In the 2026/27 tax year, how much can you earn before paying tax comes down to one figure: most people in the UK can earn £12,570 before paying any Income Tax. This is the Personal Allowance. You only pay tax on income above it, and the rate you pay depends on how far over the threshold you go.
That £12,570 covers most types of income, including your salary, pension, self-employed profits and rental income added together. If your total income for the year stays at or below it, you owe no Income Tax at all.
What Is the Personal Allowance?
The Personal Allowance is the amount of income you can receive tax-free each year. For 2026/27 it is frozen at £12,570, unchanged since 2021/22. The freeze is set to run until April 2031, which means more people are gradually drawn into paying tax as their earnings rise, even though the headline figure stays the same.
Everyone is entitled to the full Personal Allowance unless their income is very high (see below) or HMRC has adjusted their tax code.
Income Tax Rates and Thresholds for 2026/27
Once you earn above £12,570, you pay tax in bands. Each band applies only to the slice of income that falls within it, not your whole income. These are the rates for England, Wales and Northern Ireland.
| Band | Taxable income (above allowance) | Tax rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
So if you earned £30,000, you would pay nothing on the first £12,570 and 20% on the remaining £17,430. To see your exact figure, use our Income Tax calculator.
How Scotland Differs
Scotland sets its own Income Tax bands, which differ from the table above, though the £12,570 Personal Allowance still applies UK-wide.
When Does the Personal Allowance Reduce?
It can taper away. If your adjusted net income goes above £100,000, your Personal Allowance shrinks by £1 for every £2 you earn over that limit. By the time your income reaches £125,140, the allowance has gone entirely and every pound is taxable. This creates an effective 60% tax rate on income between £100,000 and £125,140, which is why pension contributions are often used to bring income back below £100,000.
Other Tax-Free Allowances You Can Use
The Personal Allowance is not the only thing that can keep tax off your income. Depending on your circumstances, you may also benefit from:
- Trading allowance, the first £1,000 of self-employed or casual income is tax-free, so you may not need to register for Self Assessment if you stay under it.
- Property allowance, a separate £1,000 tax-free allowance for rental and property income.
- Dividend allowance, the first £500 of dividends is taxed at 0%, on top of your Personal Allowance.
- Personal Savings Allowance, basic-rate taxpayers can earn up to £1,000 of savings interest tax-free; higher-rate taxpayers get £500.
These stack with the £12,570, so someone with a small side hustle and modest dividends can often earn well over £13,000 before any tax is due.
How the Tax-Free Amount Is Applied
If you are employed or receive a pension, your Personal Allowance is built into your tax code, usually 1257L for the standard allowance. Your employer or pension provider then spreads it evenly across the year through PAYE, so you receive roughly £1,047 tax-free each month.
If you are self-employed, you claim the allowance when you file your Self Assessment return, and HMRC works out the tax due on your profits above £12,570.
A Worked Example on £45,000
Take someone earning a £45,000 salary in 2026/27:
- First £12,570, tax-free
- Remaining £32,430, taxed at 20% = £6,486
Their take-home pay is reduced by Income Tax of £6,486, plus National Insurance, which has its own separate threshold. The two are calculated independently, so passing the £12,570 mark does not trigger both at once.
Frequently Asked Questions
Do I have to pay tax if I earn under £12,570?
No. If your total taxable income for the year is £12,570 or less, you pay no Income Tax. You may still need to file a Self Assessment return in some cases, for example, if you are self-employed and earn over £1,000, even when no tax is owed.
How much can I earn before paying 40% tax?
In 2026/27 you start paying the 40% higher rate on income above £50,270. Only the portion above that threshold is taxed at 40%, everything below it is taxed at 0% or 20%.
Does the Personal Allowance apply to pensions and rental income?
Yes. The £12,570 applies to your total taxable income from all sources combined, including salary, private and state pensions, rental profits and self-employed earnings. You get one allowance, not one per income type.
Is the Personal Allowance the same across the whole UK?
The £12,570 Personal Allowance applies UK-wide, including Scotland. However, Scotland sets its own Income Tax rates and bands above the allowance, so a Scottish taxpayer may pay a different amount on the same income. You can read more on our FAQ page.
For the official figures and to check your own tax code, see HMRC's guidance on Income Tax rates and Personal Allowances.
Not sure whether you owe tax, or want to make the most of every allowance available to you? Get in touch with Zmartly and we'll review your income, check your tax code and make sure you're not paying a penny more than you need to.
