Key takeaways
- The Personal Allowance of £12,570 is the main tax-free amount, frozen until April 2031.
- Separate allowances cover savings interest (up to £1,000), dividends (£500), small trading and property income (£1,000 each) and letting a room (£7,500).
- Capital gains of up to £3,000 a year are tax-free, and ISAs shelter £20,000 of new savings each year.
- For Inheritance Tax, estates can pass on up to £325,000, plus £175,000 for a home left to direct descendants, and annual gifts of £3,000 are exempt.
- Some allowances are lost at higher incomes, especially the Personal Allowance above £100,000.
The UK tax system has a long list of allowances, each with its own rules. This page brings the main ones for the 2026/27 tax year (6 April 2026 to 5 April 2027) together, with links to the detailed guides.
Income Tax allowances
| Allowance | 2026/27 | Key rule |
|---|---|---|
| Personal Allowance | £12,570 | Reduced by £1 for every £2 of income over £100,000; nil at £125,140 |
| Marriage Allowance | £1,260 transferable | Lower earner under £12,570; recipient a basic rate taxpayer |
| Married Couple’s Allowance | Up to £11,700 (relief at 10%) | One partner born before 6 April 1935 |
| Blind Person’s Allowance | £3,250 | Registered blind or certified severely sight impaired |
| Personal Savings Allowance | £1,000 basic rate, £500 higher rate, £0 additional rate | Applies to interest |
| Starting rate for savings | Up to £5,000 at 0% | Reduced by non-savings income above £12,570 |
| Dividend Allowance | £500 | Applies to dividends outside ISAs and pensions |
| Trading allowance | £1,000 | Gross trading income; can replace actual expenses |
| Property allowance | £1,000 | Gross property income; can replace actual expenses |
| Rent a Room relief | £7,500 (£3,750 if shared with another person) | Furnished room in your own home |
Trading and property allowances
If your gross income from self-employment or property is £1,000 or less in a tax year, you do not need to report it or pay tax on it. Above £1,000, you can either deduct the £1,000 allowance from your income or deduct your actual expenses, whichever is better. You cannot use the property allowance against income that gets Rent a Room relief, and neither allowance can be used for income from your own company or partnership.
Employment-related tax-free amounts
| Item | Tax-free limit 2026/27 |
|---|---|
| Mileage allowance payments for business travel in your own car | 55p a mile for the first 10,000 miles, 25p after |
| Trivial benefits from your employer | Up to £50 each (directors of close companies capped at £300 a year) |
| Annual staff party or event | Up to £150 a head per year |
| Employer payment for working from home | £6 a week without evidence |
| Redundancy and termination payments | First £30,000 of qualifying payments |
| Employer pension contributions | Within the annual allowance |
Savings and investment wrappers
| Allowance | 2026/27 |
|---|---|
| ISA allowance | £20,000 (cash ISAs capped at £12,000 for under-65s from April 2027) |
| Lifetime ISA | £4,000 within the ISA allowance, plus 25% bonus |
| Junior ISA | £9,000 per child |
| Pension annual allowance | £60,000 (tapered for the highest earners; £10,000 after flexible access) |
| Pension tax-free lump sum | 25%, up to £268,275 |
Capital Gains Tax
| Allowance | 2026/27 |
|---|---|
| Annual exempt amount (individuals) | £3,000 |
| Annual exempt amount (most trusts) | £1,500 |
| Private residence relief | Gain on your main home, subject to conditions |
| Business Asset Disposal Relief | Gains taxed at 18% (not exempt) up to a £1 million lifetime limit |
See Capital Gains Tax rates 2026/27 and private residence relief.
Inheritance Tax
| Allowance | 2026/27 |
|---|---|
| Nil-rate band | £325,000 |
| Residence nil-rate band | £175,000, tapered away above a £2 million estate |
| Spouse and civil partner exemption | Unlimited in most cases (limited if the receiving spouse is not a long-term UK resident) |
| Annual gift exemption | £3,000, plus one unused year carried forward |
| Small gifts | £250 per person per year |
| Wedding gifts | £5,000 from a parent, £2,500 from a grandparent, £1,000 from anyone else |
| Normal expenditure out of income | Unlimited, if regular and from surplus income |
The nil-rate bands are frozen until April 2031. See Inheritance Tax and annual gift exemptions.
National Insurance
| Threshold | 2026/27 |
|---|---|
| Employee primary threshold | £12,570 a year |
| Self-employed lower profits limit (Class 4) | £12,570 a year |
| Employer secondary threshold | £5,000 a year |
| Employment Allowance (employers) | £10,500 |
See National Insurance rates 2026/27.
Frequently asked questions
How much can I earn tax-free in 2026/27?
£12,570 for most people, through the Personal Allowance. Savings interest, dividends and small trading or property income can have their own additional allowances.
What is the trading allowance?
A £1,000 allowance for self-employed income. If your gross trading income is £1,000 or less you do not need to report it; above that, you can deduct £1,000 instead of your actual expenses.
Are the allowances changing?
The Personal Allowance, higher rate threshold and Inheritance Tax nil-rate bands are frozen until April 2031. The cash ISA limit falls to £12,000 for under-65s from April 2027.
Can I lose my Personal Allowance?
Yes. It reduces by £1 for every £2 of adjusted net income over £100,000 and disappears entirely at £125,140.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance in October 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.