What Is the Personal Allowance Taper? (UK 2025/26)

The personal allowance taper is the mechanism HMRC uses to withdraw the tax-free personal allowance from higher earners. For 2025/26, every UK taxpayer starts with a personal allowance of £12,570. This is the portion of your income on which you pay zero income tax.

The Taper Mechanism

Once your adjusted net income exceeds £100,000, the personal allowance reduces by £1 for every £2 of income above that threshold. The maths is straightforward: losing £1 of allowance for every £2 earned means you effectively lose half a pound of tax-free income per extra pound earned. Since that lost allowance would have been taxed at 0% but is now taxed at 40%, the true marginal rate on this band becomes 60%.

The allowance is fully withdrawn once adjusted net income reaches £125,140 (£100,000 plus twice the £12,570 allowance). Above this point, you pay the standard 40% or 45% higher/additional rates with no personal allowance at all.

What Counts as Adjusted Net Income

Adjusted net income includes your total taxable income — salary, bonuses, dividends, rental income, and savings interest — minus specific deductions such as pension contributions and Gift Aid donations. This is the figure HMRC uses to determine how much of your personal allowance you keep.

The Freeze Effect

The personal allowance has been frozen at £12,570 since April 2022, and the government has confirmed it will remain at this level until at least April 2028. Because wages and inflation continue to rise while the threshold stays fixed, more people are being dragged into the taper zone each year. If the personal allowance had been adjusted for inflation, it would be approximately £15,480 for 2025/26.