A personal allowance is the amount of income you can earn each year before income tax applies. In the United Kingdom, every resident gets a personal allowance of £12,570 for the 2025–26 tax year. In the United States, the “personal allowances” that used to appear on Form W-4 were removed in 2020; the standard deduction now does that job, and for 2026 it runs from $16,100 to $32,200 depending on how you file.
The UK Personal Allowance for 2025–26
The UK tax year runs from 6 April 2025 to 5 April 2026, and during that window you can earn £12,570 from wages, pensions, interest, or dividends before any income tax is due.1GOV.UK. Income Tax Rates and Personal Allowances – Current Rates and Allowances Above the threshold, the basic rate of 20% covers income up to £50,270, the higher rate of 40% runs from £50,271 to £125,140, and the additional rate of 45% takes over beyond that.
The allowance is individual. Each person gets their own regardless of marital status, and there’s nothing to apply for. Your employer or pension provider handles it through PAYE. The £12,570 figure has been frozen since the 2021–22 tax year and is expected to remain frozen through at least 2027–28, so wage growth is pulling more income into the taxable range each year.
Losing the Allowance Above £100,000
If your adjusted net income goes above £100,000, the allowance starts to shrink. For every £2 you earn above that line, £1 comes off your allowance.1GOV.UK. Income Tax Rates and Personal Allowances – Current Rates and Allowances By £125,140 the allowance is gone entirely.
Inside that £100,000–£125,140 band, the effective marginal rate reaches 60%: the normal 40% higher rate plus another 20% from the vanishing allowance. Paying more into a pension through salary sacrifice is the usual way to pull adjusted net income back below £100,000 and keep the full allowance.
Marriage Allowance and Blind Person’s Allowance
Two additions can push your tax-free amount above £12,570. The Marriage Allowance lets one spouse or civil partner transfer £1,260 of their allowance to the other, worth up to £252 a year off the recipient’s tax bill. The person transferring must earn less than £12,570, and the person receiving must be a basic-rate taxpayer earning between £12,571 and £50,270.2GOV.UK. Marriage Allowance – How It Works Cohabiting couples don’t qualify.
The Blind Person’s Allowance adds £3,130 to your tax-free income for 2025–26.3UK Legislation. Income Tax (Indexation of Blind Persons Allowance and Married Couples Allowance) In England and Wales you need to be registered with your local council as blind or severely sight impaired and hold a supporting certificate. In Scotland and Northern Ireland you qualify if you can’t do work for which eyesight is essential.4GOV.UK. Blind Persons Allowance – Eligibility It’s not means-tested and stacks on top of your personal allowance, though the £100,000 taper still applies to the combined total.
Checking Your Tax Code
HMRC converts your allowance into a tax code that payroll software reads to work out how much tax to deduct from each payment. The standard code for 2025–26 is 1257L, which matches the £12,570 figure directly. The tax-free amount is spread evenly across your pay periods so you get the benefit throughout the year.5GOV.UK. Understanding Your Employees Tax Codes – Overview
Your code appears on your payslip and in your HMRC online account. When something changes, such as taking on the Marriage Allowance or crossing the £100,000 taper, HMRC sends your employer an updated code. Check the code at the start of each tax year. An incorrect one leads to overpaying and claiming a refund later, or underpaying and getting a bill.
How the US Replaced Personal Allowances
The US used to work in a similar way. Employees would fill out Form W-4 with a number of “personal allowances,” and each one reduced the amount of pay subject to withholding. That system ended when the IRS redesigned the W-4 for 2020.6Internal Revenue Service. Improved Tax Withholding Estimator Helps Workers Target the Refund They Want The current form asks for your filing status in Step 1 and builds the calculation around the standard deduction; leaving Steps 2 through 4 blank tells payroll to withhold as though the standard deduction is your only tax break.7IRS.gov. Form W-4 (2026) Employees Withholding Certificate
The separate personal exemption — once around $4,000 for yourself and each dependent — was set to zero by the Tax Cuts and Jobs Act in 2017, and the One, Big, Beautiful Bill Act made that permanent. It stays at $0 for 2026 and beyond.8Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Higher standard deductions were meant to offset the loss, though families with several dependents may still notice a difference.
The 2026 US Standard Deduction Amounts
For the 2026 tax year, the standard deduction is:8Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
- Single or married filing separately: $16,100
- Married filing jointly or qualifying surviving spouse: $32,200
- Head of household: $24,150
These amounts come off your taxable income automatically when you claim the standard deduction on your federal return. You can itemize instead if your deductible expenses exceed your standard amount, but for most people the standard deduction is the larger figure.
Extra US Deductions for Age 65+ and Blindness
Taxpayers who are 65 or older or legally blind get an additional standard deduction on top of the base figure. For 2026 that additional amount is $2,050 per qualifying condition for single and head of household filers, and $1,650 per qualifying condition for married filers. Someone who is both 65 and blind claims the addition twice.8Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
The One, Big, Beautiful Bill also created an enhanced senior deduction that runs from 2025 through 2028. Taxpayers age 65 and older can claim an extra $6,000, or $12,000 for married couples where both spouses qualify, on top of the regular additional standard deduction.9Internal Revenue Service. Check Your Eligibility for the New Enhanced Deduction for Seniors It phases out once modified adjusted gross income passes $75,000 for single filers or $150,000 for joint filers. A couple both over 65, filing jointly, and earning under $150,000 could stack the $32,200 base, $3,300 in regular additional deductions, and $12,000 in enhanced deductions, shielding $47,500 from federal income tax.
If You’re Not a Resident
Both countries tie these thresholds to residency. In the UK, you generally need to be a UK resident to get the full personal allowance, though citizens of European Economic Area countries and some others may qualify under treaty.
In the US, the standard deduction is available to resident aliens — those with a green card or who meet the substantial presence test based on days in the country over a three-year window.10Internal Revenue Service. Substantial Presence Test Nonresident aliens cannot claim it. They must itemize any deductions they qualify for, and those are limited to expenses tied to US-source income.11Internal Revenue Service. Nonresident – Figuring Your Tax A narrow exception under a specific tax treaty lets students and business apprentices from India claim the standard deduction.