What is the personal allowance for 2026/27?

If adjusted net income is above £100,000, the Personal Allowance tapers away. This creates a high marginal tax band between £100,000 and £125,140 because extra income both attracts tax and removes allowance.

Tax planning may be useful if your income is near the taper zone, especially where pension contributions, charitable giving, bonuses, dividends, or rental income are involved.

Suppose your adjusted net income is £110,000. That is £10,000 above the £100,000 income limit, so the standard allowance is reduced by £5,000: £1 for every £2 over the limit. The remaining Personal Allowance would be £7,570 before considering any other circumstance that affects it.

At adjusted net income of £125,140, the £12,570 standard allowance has been fully withdrawn. This is why a forecast based only on gross salary can be misleading when bonuses, dividends, savings income or benefits push total income through the taper range.

Adjusted net income starts with total taxable income before Personal Allowances and then applies specific adjustments. It can include employment income, trading profit, pensions, rent, savings interest and dividends. Certain gross pension contributions and Gift Aid donations can reduce the adjusted figure under the applicable rules.

Do not assume that moving money into a pension automatically produces the same result in every arrangement. Workplace net-pay schemes, relief-at-source contributions, annual allowance limits and employer contributions are treated differently, so check the mechanics before acting.

A useful estimate needs every material income source and any eligible deductions, not just a payslip. Gather the following before deciding whether action is worthwhile.