Basic Rate Tax Allowance: £12,570 Threshold and 20% Band

The basic rate tax allowance in the UK works in two parts: a personal allowance of £12,570 that you pay no income tax on, and a basic rate band above it where every pound up to £50,270 is taxed at 20%. Both figures apply in the 2025/26 and 2026/27 tax years, and both have been frozen at these levels since 2021/22.¹

The £12,570 Personal Allowance

The personal allowance is the slice of your annual income that is completely free from income tax. Earn less than £12,570 in a tax year (6 April to 5 April) and you owe nothing. The allowance covers wages, pensions, and most other taxable income, and it is the same figure whether you live in England, Wales, Scotland, or Northern Ireland.¹

Under PAYE, your employer spreads the allowance evenly across your pay periods, so roughly £1,048 of each month’s pay comes through tax-free before any 20% deduction begins.

How the 20% Basic Rate Band Works

Once your income crosses £12,570, the next £37,700 sits in the basic rate band and is taxed at 20%. That band runs up to £50,270 of total income.¹

A worked example makes the arithmetic concrete. If you earn £30,000 in a tax year, the first £12,570 is covered by the personal allowance. The remaining £17,430 is taxed at 20%, which comes to £3,486 for the year. Everything below the threshold stays untaxed; only the portion above it is charged.

Most employed people in the UK sit entirely within the personal allowance and basic rate band. If that’s you, PAYE handles the calculation each payday and there is usually nothing further to do.

Why the Freeze Matters

The £12,570 and £50,270 thresholds were originally meant to rise with inflation each year. The government froze them in 2021/22, and at the Autumn Budget 2025 the Chancellor extended that freeze through April 2031.²

The practical effect is that when your pay rises with inflation, more of it crosses into the 20% band even though your real spending power hasn’t grown. Someone who was well clear of the higher rate a few years ago may now find pay rises pushing them close to £50,270. This is sometimes called fiscal drag.

Scotland Has Different Rates Above the Allowance

Scottish residents get the same £12,570 personal allowance, but the rates and bands above it are set by the Scottish Parliament and look nothing like the rest-of-UK structure. Scotland has six bands for 2025/26 rather than three, starting with a 19% starter rate on income from £12,571 to £15,397 and a 20% basic rate that only runs from £15,398 to £27,491.³

A Scottish taxpayer earning £40,000 passes through three different rates on the way there, whereas someone on the same salary in England stays inside a single 20% band. If you moved between Scotland and the rest of the UK part-way through a tax year, or you’re not sure which regime applies, your tax code carries an S prefix for Scottish rates.

You Start Losing the Allowance Above £100,000

The £12,570 allowance is not permanent for high earners. If your adjusted net income goes above £100,000, the allowance is reduced by £1 for every £2 you earn above that level. By £125,140, it has been withdrawn entirely and every pound of your income is taxable.¹

Between £100,000 and £125,140 this produces an effective marginal rate of 60%. For each extra £100 earned in that range, £40 goes to higher rate tax and another £20 is lost through the shrinking allowance. It is a steeper marginal rate than the 45% paid on income above £125,140.

Adjusted net income is your total taxable income minus certain pension contributions and grossed-up Gift Aid donations. Each £1 donated under Gift Aid counts as £1.25 off net income, because the charity has already reclaimed 20% basic rate relief.⁴ A pension contribution or charitable donation timed to bring adjusted net income back below £100,000 can restore some or all of the allowance.

Reading Your Tax Code

HMRC signals your allowance to your employer through a tax code. The standard code for 2025/26 and 2026/27 is 1257L. The number is your personal allowance divided by ten (£12,570 ÷ 10 = 1257), and the letter L confirms the standard allowance.⁵

Other codes you may see on a payslip include:

BR — all income from this job or pension taxed at 20%, with no personal allowance applied (common on a second job, where the allowance is already being used elsewhere)
D0 — all income taxed at 40%
K — untaxed income exceeds your allowance, so extra tax is collected through your pay
M — you have received a Marriage Allowance transfer from your partner
0T — the personal allowance has been fully used up or HMRC lacks the details to assign a proper code

If you start a new job without handing over a P45, HMRC may put you on an emergency code, shown by W1, M1, or X after the number. Tax is then calculated on each pay period in isolation rather than spread across the year, which often means overpaying at first. HMRC typically corrects the code within about 35 days of your start date and refunds any excess.⁶

Sharing the Allowance Through Marriage Allowance

If one partner in a marriage or civil partnership earns less than the £12,570 allowance, they can transfer £1,260 of it to the other. The receiving partner’s tax bill drops by up to £252 a year. To qualify, the receiver must be a basic rate taxpayer with income between £12,571 and £50,270. In Scotland, the receiver must pay the starter, basic, or intermediate rate, which usually means income up to £43,662.⁷

Claims can be backdated up to four tax years, so couples who have been eligible but never applied could recover close to £1,000 in overpaid tax. The application is free through GOV.UK. If the higher-earning partner crosses into the 40% band in any year, the couple loses eligibility for that year.

1
GOV.UK. Income Tax Rates and Personal Allowances
2
House of Commons Library. Fiscal Drag: An Explainer
3
Scottish Government. Scottish Income Tax 2025 to 2026: Factsheet
4
GOV.UK. Personal Allowances: Adjusted Net Income
5
GOV.UK. What Your Tax Code Means
6
GOV.UK. Emergency Tax Codes
7
GOV.UK. Marriage Allowance: How It Works