How Much Can You Earn Before Paying Tax in the UK? 2026/27

If you are wondering how much can you earn before paying tax in the UK, the straightforward answer for most people is £12,570 a year.

For the 2026/27 tax year, which runs from 6 April 2026 to 5 April 2027, the standard Personal Allowance remains £12,570. This means most people can receive up to £12,570 of taxable income before they start paying Income Tax.

However, the £12,570 figure does not tell the whole story. Your tax-free amount can be affected by your total income, whether you are employed or self-employed, savings interest, dividends, side-hustle income and where in the UK you live.

For business owners in particular, it is also important to distinguish Income Tax from National Insurance, because they are separate charges even though their thresholds can overlap.

How Much Can You Earn Before Paying Tax in 2026/27?

For most UK taxpayers, the standard tax-free Personal Allowance is £12,570 in the 2026/27 tax year.

Here is the position at a glance:

For England, Wales and Northern Ireland, the main Income Tax rates for 2026/27 are 20%, 40% and 45%. Scotland has different Income Tax bands for earnings and certain other income.

The important point is that crossing a threshold does not mean your entire salary is suddenly taxed at the new rate. Only the portion falling within each relevant band is taxed at that rate.

What Is the Personal Allowance?

The Personal Allowance is the amount of taxable income most people can receive in a tax year before Income Tax becomes payable.

For 2026/27, the standard Personal Allowance is:

£12,570 per year

That works out at roughly:

• £1,047.50 per month
• £241.73 per wkee

PAYE operates using pay-period thresholds and your tax code, so the amount deducted from an individual payslip may not always match a simple annual calculation exactly.

For someone with one normal PAYE job and the standard allowance, the usual tax code is 1257L.

For example, suppose someone earns £20,000 during 2026/27.

Their simplified Income Tax calculation would be:

They are not paying 20% tax on the whole £20,000. They are paying it on the £7,430 remaining after their Personal Allowance.

What Are the Income Tax Bands for 2026/27?

For taxpayers in England, Wales and Northern Ireland with the standard Personal Allowance, the headline 2026/27 position is:

The taxable basic-rate band itself is £37,700 after allowances.

Example: Earning £30,000

Someone earning £30,000 with the full Personal Allowance would have:

£30,000 − £12,570 = £17,430 taxable income

At a basic Income Tax rate of 20%, the simplified Income Tax bill would therefore be:

£17,430 × 20% = £3,486

National Insurance may then be payable separately.

Example: Earning £60,000

Someone earning £60,000 still receives the standard Personal Allowance, assuming nothing else affects their entitlement.

Their taxable income would be:

£60,000 − £12,570 = £47,430

The first £37,700 would fall within the 20% basic-rate band, while the remaining £9,730 would fall within the 40% higher-rate band.

That produces a simplified Income Tax calculation of:

This illustrates why entering the higher-rate band does not mean the entire £60,000 becomes taxable at 40%.

Do You Lose the £12,570 Personal Allowance If You Earn Over £100,000?

Yes, gradually. The standard Personal Allowance starts reducing when adjusted net income exceeds £100,000. For every £2 of income above £100,000, £1 of Personal Allowance is withdrawn.

By the time adjusted net income reaches £125,140, the standard Personal Allowance has been completely removed.

For example:

This creates an important tax-planning issue for high earners because income between £100,000 and £125,140 can effectively face a particularly high marginal Income Tax burden as the allowance is withdrawn.

Business owners, directors and other higher earners should therefore look at their complete tax position rather than considering salary alone.

How Much Can You Earn Before Paying Tax If You Are Self-Employed?

Self-employed people normally have the same standard £12,570 Personal Allowance. However, Income Tax is generally calculated on taxable business profit, rather than simply the amount customers pay into the business.

Profit broadly means business income after allowable business costs and applicable deductions.

For example:

The actual calculation can differ depending on the person’s other income and circumstances. People considering flexible self-employment can also see how these rules apply in practice in our guide to Amazon Flex UK earnings and tax.

Can You Earn £1,000 From a Side Hustle Without Paying Tax?

There is a separate £1,000 trading allowance, and this is frequently confused with the £12,570 Personal Allowance. HMRC provides a trading allowance of up to £1,000 of gross qualifying trading income per tax year.

It can apply to activities such as:

• Freelancing
• Casual services
• Selling services online
• Certain gig-economy work
• Hiring out personal equipment
• Some small side businesses

If qualifying annual gross trading income is £1,000 or less, an individual will often not need to report that income to HMRC, although exceptions apply. If gross trading income exceeds £1,000, the person may need to register for Self Assessment.

Is the £1,000 Trading Allowance Extra to the £12,570 Personal Allowance?

They are different allowances serving different purposes. This is easiest to understand with an example. Suppose someone earns £28,000 from employment and receives another £900 from qualifying freelance work.

Their salary has already used their Personal Allowance and created an Income Tax liability through PAYE.

However, the £900 of qualifying gross freelance income may fall within the trading allowance, meaning it can potentially receive full trading allowance relief.

The £1,000 rule does not, however, mean everyone can simply add £1,000 to their salary before Income Tax starts. HMRC applies specific rules governing which income qualifies for the trading allowance.

How Much Can You Earn Before Paying National Insurance?

Income Tax and National Insurance are not the same thing. For most employees in 2026/27, employee Class 1 National Insurance becomes payable once earnings exceed the Primary Threshold of £12,570 per year, equivalent to £242 per week or £1,048 per month under the published thresholds.

For most employees, the main employee National Insurance rates are:

Someone can therefore have both Income Tax and National Insurance deducted from their wages. National Insurance is also relevant to future benefit and State Pension entitlement. Anyone concerned about their contribution history can read our guide explaining National Insurance and State Pension qualifying years.

How Much Can Self-Employed People Earn Before Paying National Insurance?

Self-employed National Insurance works differently from employee National Insurance. For 2026/27, self-employed people generally pay Class 4 National Insurance when their profits exceed £12,570.

The Class 4 rates are:

• 6% on profits over £12,570 up to £50,270
• 2% on profits over £50,270

HMRC also states that where self-employed profits reach the relevant Small Profits Threshold, Class 2 contributions can be treated as having been paid for National Insurance record purposes without an actual Class 2 payment being required.

This distinction matters because a sole trader should not assume that having no Income Tax bill automatically means National Insurance is irrelevant.

How Much Savings Interest Can You Earn Without Paying Tax?

Savings have their own tax rules. Most taxpayers have a Personal Savings Allowance, which allows a certain amount of savings interest to be received without Income Tax.

For 2026/27:

There is also a starting rate for savings of up to £5,000, although how much is available depends on the amount of other income a person receives.

Interest earned inside qualifying tax-free accounts such as ISAs is generally treated separately. Therefore, someone asking “how much can I earn before paying tax?” should consider income from all relevant sources rather than looking only at their salary.

How Much Dividend Income Can You Receive Tax-Free?

This is particularly relevant for company shareholders and directors.

The Dividend Allowance is £500 for the 2026/27 tax year.

Dividend Income Tax rates applying above the available allowance are:

These rates apply to taxable dividends within the relevant bands.

The Dividend Allowance does not mean the first £500 of dividends disappears when determining an individual’s tax band. Dividend taxation can become more complicated where salary, business income, savings and dividends are combined.

Company directors should therefore calculate their overall personal tax position rather than simply assuming dividends are tax-free.

Is Capital Gains Tax Included in the £12,570 Personal Allowance?

No.

Capital Gains Tax and Income Tax have separate allowances and rules.

Selling assets at a profit can therefore create a Capital Gains Tax liability even if a person’s employment income is below a particular Income Tax threshold.

This can be particularly relevant to investments, property and cryptoassets.

For example, our guide to HMRC crypto Capital Gains Tax explains how the tax treatment of investment gains differs from ordinary earnings.

The key distinction is that Income Tax is generally charged on taxable income, while Capital Gains Tax is generally concerned with gains arising when chargeable assets are disposed of.

Do Scottish Taxpayers Pay Tax After Earning £12,570?

Most Scottish taxpayers can still receive the standard UK Personal Allowance of £12,570, but Scotland has separate Income Tax rates and bands for earnings, pensions and most other non-savings, non-dividend income.

For someone receiving the standard Personal Allowance in 2026/27, Scottish bands include:

Scottish Income Tax applies differently to savings and dividend income, which continue to use UK-wide rules.

That means UK tax articles quoting only the 20%, 40% and 45% bands should not automatically be applied to Scottish employment income.

Do Pensioners Get the Same £12,570 Tax-Free Allowance?

Generally, pension income is taxable income and the standard Personal Allowance can apply in the same way.

The State Pension, workplace pensions and private pension income can therefore all contribute towards a person’s total taxable income.

This has become increasingly relevant as pension incomes rise while the standard Personal Allowance remains £12,570.

A person does not necessarily pay tax simply because their pension is above one particular figure. HMRC considers their overall taxable income and available allowances.

Anyone approaching retirement should also understand how National Insurance affects State Pension entitlement before assuming that Income Tax and National Insurance operate in the same way.

What Happens If You Have More Than One Job?

Having two jobs does not normally give someone two Personal Allowances. The Personal Allowance generally applies to the individual, not separately to every employer.

For example, suppose someone earns:

• £10,000 from Job A
• £8,000 from Job B

Their combined employment income is £18,000.

They cannot normally claim £12,570 tax-free from each employer independently. Their available allowance needs to be allocated through their tax codes so that the correct amount of tax is collected overall.

This is one reason people starting a second job sometimes see an unfamiliar tax code on their payslip.

What Happens If You Are Employed and Self-Employed at the Same Time?

Someone can legally be employed and run their own business at the same time. However, HMRC considers the individual’s income from different taxable sources when calculating the final Income Tax liability.

Imagine someone earns:

The person does not normally receive one £12,570 Personal Allowance for employment and another £12,570 allowance for self-employment. The standard allowance generally applies across their total relevant income.

PAYE tax may already have been deducted from their salary, while the remaining liability from self-employment may be dealt with through Self Assessment.

Does Rental Income Count Towards the Tax-Free Limit?

Rental profits can be taxable income. There is a separate £1,000 property allowance for qualifying property income, although specific conditions determine when it can be used.

Landlords also need to distinguish between:

• Gross rental income
• Allowable property expenses
• Taxable property profit
• Finance-cost rules
• Capital gains on property disposals

Property taxation can therefore be substantially more complicated than simply applying the £12,570 Personal Allowance.

Landlords considering more complex business structures should also be aware of HMRC’s current approach to certain arrangements, covered in our guide to the HMRC landlord tax crackdown.

Why Might You Pay Tax Even If You Earn Less Than £12,570?

Although £12,570 is the standard Personal Allowance, it should not be interpreted as a universal guarantee that nobody earning less than this figure will ever face a tax liability.

A person’s position can be affected by factors including:

• Different types of taxable income
• Previous underpaid tax
• Taxable employment benefits
• Multiple income sources
• An adjusted tax code
• Restrictions to allowances
• Income relating to another tax year

The correct question is therefore not only “How much do I earn?”

It is also “How much taxable income do I have, and which allowances apply to me?”

Why Might Your Tax Code Affect How Much Tax You Pay?

Employees normally have Income Tax collected through PAYE.

The employer uses the employee’s tax code to determine how much Income Tax should be deducted.

The familiar 1257L code commonly reflects the standard £12,570 Personal Allowance, but not everyone will have that code.

A tax code can change because of matters such as:

• Tax owed from an earlier period
• Taxable company benefits
• Multiple jobs or pensions
• Changes to estimated income
• Allowances transferred between spouses
• Adjustments made by HMRC

Someone who believes too much or too little Income Tax is being deducted should therefore check the tax code rather than relying purely on the headline Personal Allowance.

How Can You Work Out Whether You Will Pay Tax?

A simple starting calculation is:

• Step 1: Add together relevant taxable income.
• Step 2: Deduct any available tax-free allowances.
• Step 3: Identify the amount remaining as taxable income.
• Step 4: Apply the appropriate Income Tax bands.
• Step 5: Calculate National Insurance separately where applicable.
• Step 6: Consider separate rules for dividends, savings, property income and capital gains.

For a straightforward employee with no other taxable income, PAYE normally handles most of this automatically.

For sole traders, landlords, company directors, investors and people with several sources of income, the calculation can require considerably more care.

So, How Much Can You Earn Before Paying Tax?

For most people asking how much can you earn before paying tax in the UK, the headline answer for 2026/27 is £12,570. That is the standard Personal Allowance, and Income Tax is generally charged only on taxable income exceeding the allowance.

However, the final position depends on where the money comes from and the person’s wider circumstances. Employees need to consider PAYE and National Insurance, sole traders need to consider taxable business profits and Self Assessment, while company owners may need to account for salary and dividends separately.

There are also specific allowances for trading income, property income and savings interest.

For that reason, £12,570 is best viewed as the starting point for understanding UK Income Tax, rather than a universal threshold applying identically to every type of income.

Frequently Asked Questions

How much can you earn before paying tax in the UK in 2026?

For the 2026/27 tax year, the standard Personal Allowance is £12,570. Most people can therefore receive up to £12,570 of taxable income before paying Income Tax, although individual circumstances can change the amount available.

Can I earn £12,570 without paying any tax?

You would normally pay no Income Tax on income covered by the standard £12,570 Personal Allowance. Other taxes and circumstances may still need to be considered.

How much can I earn per month before paying Income Tax?

The £12,570 annual standard Personal Allowance equates to approximately £1,047.50 per month. PAYE calculations use tax codes and pay-period rules, so actual deductions should be checked against the relevant payslip.

How much can I earn per week before paying tax?

The annual £12,570 Personal Allowance is approximately £241.73 per week when divided by 52. Published PAYE and National Insurance weekly thresholds use their own prescribed figures.

How much can I earn from a side hustle tax-free?

Qualifying individuals can generally receive up to £1,000 of gross trading income within the trading allowance. Once relevant gross trading income exceeds £1,000, HMRC reporting requirements may apply.

Do I pay tax on everything once I earn more than £12,570?

No. Normally, only income above the available Personal Allowance becomes taxable. The appropriate rate then depends on which tax band the income falls within.

How much can a self-employed person earn before paying tax?

Self-employed individuals generally have the same £12,570 standard Personal Allowance. Income Tax is usually based on taxable profits together with other taxable income rather than turnover alone.

When do I start paying National Insurance?

For most employees in 2026/27, Class 1 employee National Insurance starts above the £12,570 annual Primary Threshold, subject to pay-period calculations. Self-employed Class 4 National Insurance generally applies to profits above £12,570.

Does everyone get a £12,570 Personal Allowance?

No. The Personal Allowance begins to reduce when adjusted net income exceeds £100,000 and is completely removed at £125,140. Other circumstances can also affect an individual’s allowance.

Is the tax-free allowance different in Scotland?

The standard Personal Allowance is still £12,570 for most Scottish taxpayers, but Scotland has different Income Tax rates and bands for employment, pension and most other non-savings, non-dividend income.

Disclaimer: This article provides general information about UK taxation and is not personal tax, accounting or financial advice. Tax treatment depends on individual circumstances and rules can change.