The 2025/26 Personal Allowance
The personal allowance is the amount of income you can earn each tax year before you start paying Income Tax. For 2025/26:[1]
Personal Allowance for 2025/26: £12,570
This means you pay no Income Tax on the first £12,570 of your total income.
The personal allowance has been frozen at £12,570 since 2021/22 and is expected to remain at this level until at least April 2028. See Income Tax Rates History for how rates and thresholds have changed over time.
Income Tax Bands & Rates (2025/26)
After your personal allowance, your remaining income is taxed at the following rates:[1]
| Band | Taxable Income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 – £50,270 | 20% |
| Higher Rate | £50,271 – £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
Example: If your total taxable income is £55,000:
- £12,570 at 0% = £0
- £37,700 at 20% = £7,540
- £4,730 at 40% = £1,892
- Total Income Tax: £9,432
The Personal Allowance Taper
If your total income exceeds £100,000, your personal allowance is reduced by £1 for every £2 of income above £100,000.[1]
This means:
- At £100,000 income: full £12,570 allowance
- At £112,570 income: £7,285 allowance
- At £125,140 income: £0 allowance (completely tapered away)
The taper creates an effective tax rate of 60% on income between £100,000 and £125,140 (40% tax + 20% from losing the allowance). This is one of the highest marginal rates in the UK tax system.
Marriage Allowance
If you’re married or in a civil partnership, you may be able to transfer up to £1,260 of your personal allowance to your spouse/partner.[2]
You can claim if:
- One partner earns less than £12,570 (i.e. doesn’t use their full allowance)
- The other partner is a basic-rate taxpayer (income up to £50,270)
The tax saving is up to £252 per year (20% of £1,260). You can backdate claims for up to 4 years.
Blind Person’s Allowance
If you’re registered as blind or severely sight-impaired, you’re entitled to an additional allowance of £3,130 (2025/26 rate) on top of the standard personal allowance.[3]
This increases your tax-free income to £15,700. If you can’t use the full allowance, you can transfer the unused portion to your spouse or civil partner.
Other Tax-Free Allowances
In addition to the personal allowance, you may benefit from:[4]
| Allowance | Amount (2025/26) | Notes |
|---|---|---|
| Trading Allowance | £1,000 | Tax-free self-employment income (if below £1,000, no need to report) |
| Property Income Allowance | £1,000 | Tax-free rental income (if below £1,000, no need to report) |
| Dividend Allowance | £500 | Tax-free dividend income |
| Personal Savings Allowance | £1,000 / £500 | £1,000 for basic-rate, £500 for higher-rate, £0 for additional-rate |
Dividend Tax Rates
Dividends above your dividend allowance are taxed at special rates:[1]
- Basic rate: 8.75%
- Higher rate: 33.75%
- Additional rate: 39.35%
How This Applies Under MTD
Under MTD, your quarterly updates report self-employment and property income. HMRC calculates your running tax position based on these updates, applying your personal allowance and the relevant tax bands automatically. You send the updates through MTD-compatible software.
Your Final Declaration at year-end adds all other income (dividends, pensions, PAYE, savings) and applies the full set of allowances and reliefs to produce your final tax bill.[5]
Frequently Asked Questions
What is the UK personal allowance for 2025/26?
The personal allowance is £12,570 for the 2025/26 tax year. This is the amount of income you can earn before you start paying Income Tax.
What happens to the personal allowance if I earn over £100,000?
Your personal allowance is reduced by £1 for every £2 of income above £100,000. It is completely tapered away at £125,140, creating an effective 60% marginal tax rate in that band.
What are the UK Income Tax rates for 2025/26?
The basic rate is 20% on income from £12,571 to £50,270, the higher rate is 40% from £50,271 to £125,140, and the additional rate is 45% on income above £125,140.
What is Marriage Allowance and how much can I save?
Marriage Allowance lets you transfer up to £1,260 of your personal allowance to your spouse or civil partner if one of you earns below £12,570 and the other is a basic-rate taxpayer. It saves up to £252 per year.
Further Reading
- Income Tax Rates & Bands: History — how rates and thresholds have changed since 2020/21
- National Insurance for Self-Employed — NI is calculated in addition to Income Tax
- Payment on Account Explained — how advance tax payments work
- Allowable Expenses — reduce your taxable profit before applying tax bands
Looking for simple Income Tax MTD software?
#GoFile is HMRC-recognised and trusted by 50,000+ UK businesses. Set up in minutes, file with confidence.
Get Started For FreeNo credit card required · Cancel anytime
Sources
- Income Tax rates and Personal Allowances — GOV.UK
- Marriage Allowance — GOV.UK
- Blind Person's Allowance — GOV.UK
- Tax-free allowances on property and trading income — GOV.UK
- Self Assessment tax returns — GOV.UK