The UK tax allowances for 2025/26 keep the Personal Allowance at £12,570, meaning the first £12,570 you earn is free of income tax.1GOV.UK. Income Tax Rates and Personal Allowances Around that headline sit a dozen smaller thresholds covering savings, dividends, capital gains, property income, pensions, ISAs, and inheritance, and each one has its own rules. The tax year runs from 6 April 2025 to 5 April 2026.
Personal Allowance and Income Tax Bands
The £12,570 Personal Allowance applies to almost every UK resident, whether income comes from a job, self-employment, or a pension. The figure has been frozen since 2021/22 and is set to stay locked until at least 2027/28, so pay rises that would once have kept pace with inflation now push more of your income into taxable bands.
In England, Wales, and Northern Ireland, income above the allowance is taxed at:1GOV.UK. Income Tax Rates and Personal Allowances
- 20% basic rate on taxable income from £12,571 to £50,270
- 40% higher rate from £50,271 to £125,140
- 45% additional rate above £125,140
Scotland runs a different system with six bands, ranging from a 19% starter rate to a 48% top rate, and higher marginal rates kick in from £43,663.2Scottish Government. Scottish Income Tax 2025 to 2026 Factsheet The Personal Allowance itself is the same £12,570 in Scotland.
The £100,000 Taper
If your adjusted net income goes above £100,000, the Personal Allowance shrinks by £1 for every £2 of income above that line.3legislation.gov.uk. Income Tax Act 2007 – Section 35 By £125,140 it has disappeared entirely.1GOV.UK. Income Tax Rates and Personal Allowances
Between £100,000 and £125,140 this creates an effective marginal rate of 60% in England, Wales, and Northern Ireland, because every extra pound is taxed at 40% and simultaneously costs you 50p of tax-free allowance. In Scotland the combination pushes the effective rate to roughly 67.5%. Pension contributions and Gift Aid donations reduce adjusted net income, so paying more into a pension before 5 April 2026 can pull you back under the threshold and restore some or all of the allowance.
Marriage Allowance and Blind Person’s Allowance
Two provisions redistribute or top up the Personal Allowance for qualifying households.
Marriage Allowance lets one spouse or civil partner transfer £1,260 of Personal Allowance to the other.4GOV.UK. Marriage Allowance – How It Works It works when one partner earns under £12,570 and the other is a basic-rate taxpayer, and it’s worth up to £252 a year. Couples where the higher earner pays tax at the higher or additional rate don’t qualify. Claims can be backdated up to four tax years, which can produce a refund of over £1,000 for couples who missed it.5HM Revenue & Customs. Marriage Allowance Transfer
Blind Person’s Allowance adds £3,130 on top of the Personal Allowance for 2025/26 if you’re registered as severely sight impaired with your local authority, bringing your combined tax-free amount to £15,700. It rises with inflation each year and any unused portion can be transferred to a spouse or civil partner.
Savings and Dividend Allowances
Interest and dividends have their own tax-free slices, separate from the Personal Allowance.
The Personal Savings Allowance depends on your income tax band:6legislation.gov.uk. Income Tax Act 2007 – Section 12B
- Basic-rate taxpayers get £1,000 of interest tax-free
- Higher-rate taxpayers get £500
- Additional-rate taxpayers get nothing
Interest earned inside an ISA doesn’t count toward this limit, so shifting savings into a Cash ISA shelters the excess once your ordinary accounts start generating more interest than the allowance covers.
The Dividend Allowance for 2025/26 is £500, down from £2,000 in 2022/23.7HM Revenue & Customs. Income Tax – Reducing the Dividend Allowance Dividends above £500 are taxed at 8.75% (basic), 33.75% (higher), or 39.35% (additional rate). The allowance applies a 0% rate to that first £500 rather than removing it from your total income for band purposes.
Capital Gains Tax Annual Exempt Amount
Selling an asset for more than you paid produces a capital gain. For 2025/26, the first £3,000 of gains is tax-free, or £1,500 for most trustees.8HM Revenue & Customs. Capital Gains Tax Rates and Allowances That exempt amount was £12,300 two years ago, so smaller disposals now trigger a bill.
Gains above the allowance are taxed at 18% for basic-rate taxpayers and 24% for higher and additional-rate taxpayers, and from April 2025 these rates apply to both residential property and other assets.9GOV.UK. Capital Gains Tax – Rates and Allowances Gains on assets held in an ISA, and gains on selling your main home under private residence relief, remain exempt.
Property, Trading, and Rent a Room
Three separate reliefs cover small amounts of self-employed or rental income.
The trading allowance covers the first £1,000 of gross self-employment or freelance income each tax year, tax-free. The property allowance does the same for the first £1,000 of gross property income outside the Rent a Room scheme. Both work independently, so you can use each in the same year. If your gross income from either source stays at or under £1,000, you don’t need to register for Self Assessment or tell HMRC.1GOV.UK. Income Tax Rates and Personal Allowances
Above £1,000, you have to choose between deducting the flat £1,000 or deducting your actual expenses. You can’t do both. If your real costs are higher than £1,000, claiming actual expenses saves more tax. If you spent almost nothing, the flat allowance is simpler.
The Rent a Room scheme is more generous and applies only to furnished accommodation in your main home. You can earn up to £7,500 tax-free from a lodger, or £3,750 each if the income is shared with a partner or co-owner.10GOV.UK. Rent a Room in Your Home – The Rent a Room Scheme Below the limit, the income is automatically exempt and doesn’t need reporting. Above it, you can pay tax on just the excess rather than working out expenses. Separate rental properties don’t qualify.
ISAs and Pensions
The annual ISA subscription limit stays at £20,000 for 2025/26. You can split that across Cash, Stocks and Shares, Innovative Finance, and Lifetime ISAs however you like, as long as the total doesn’t exceed £20,000. Income and gains inside an ISA are free of income tax and capital gains tax. The Lifetime ISA has its own £4,000 cap within the £20,000, and the Junior ISA limit is £9,000. Any unused ISA allowance at the end of the tax year is lost.
The pension annual allowance is £60,000, or 100% of your earnings if lower, and employer contributions count toward it.11GOV.UK. Pension Schemes Rates Unused allowance from the previous three tax years can be carried forward, letting you contribute well above £60,000 in a single year if you have headroom.
High earners face a taper. If your threshold income is over £200,000 and your adjusted income (including employer contributions) is over £260,000, the allowance drops by £1 for every £2 of adjusted income above £260,000, down to a floor of £10,000.11GOV.UK. Pension Schemes Rates Anyone who has already drawn a pension flexibly has a separate money purchase annual allowance of £10,000. Going over any of these limits produces an annual allowance charge at your marginal tax rate.
Inheritance Tax Nil Rate Bands
Inheritance Tax hits at 40% on the value of an estate above the nil rate band, which has been frozen at £325,000 since 2009. A surviving spouse or civil partner inherits any unused portion, so a couple can combine allowances up to £650,000.
If you leave your home to direct descendants (children or grandchildren), an additional residence nil rate band of £175,000 applies. A single homeowner can therefore pass on up to £500,000 tax-free, and a couple using both allowances can shelter up to £1,000,000. The residence nil rate band tapers away for estates worth more than £2,000,000 and is frozen at its current level until at least April 2030.
High Income Child Benefit Charge
If you claim Child Benefit and either partner earns more than £60,000, a separate tax charge starts clawing the benefit back. At £80,000 or above, the full amount is repaid through tax.12GOV.UK. High Income Child Benefit Charge – Overview The charge is based on the higher earner’s individual income, not household income, which catches out couples who assume splitting work evenly avoids the problem.
If you’re liable for the charge, you have to file a Self Assessment return even if PAYE handles the rest of your tax. You can opt out of receiving the payments to avoid the paperwork, but it’s still worth completing the claim form to protect your National Insurance credits.
Self Assessment Deadlines
If any of these allowances tip you into Self Assessment territory, the deadlines for the 2025/26 tax year are 31 October 2026 for paper returns and 31 January 2027 for online returns. Missing either date brings an automatic £100 penalty. Any tax owed also has to be paid by 31 January 2027, or interest starts running from that date.