The personal allowance UK workers get in 2026/27 is £12,570, but not everyone gets all of it. Who is tapered, who gets a K code, and why it is frozen.
Every conversation about UK take-home pay starts in the same place. How much can I earn before any of it goes to the taxman? For 2026/27 the personal allowance UK employees get is £12,570, unchanged for the fifth year running.
What is less well understood is how many people quietly get less than that, and never notice, because the only clue is three digits at the top of a payslip.
It is the slice of your annual income that carries no income tax at all, currently £12,570, and it is applied gradually across the year rather than all at once in April.
The number in your tax code is the allowance divided by ten. £12,570 becomes 1257, and the L on the end confirms you get the standard version. That is where 1257L comes from.
One thing that confuses Scottish readers: the personal allowance UK wide is set by Westminster, not Holyrood. Scotland sets the rate bands above the allowance, not the allowance itself, which is why a Scottish payslip shows S1257L rather than a different number.
Payroll does not give you £12,570 tax free in April and then tax everything afterwards. It splits the allowance across your pay periods.
Worked example. You earn £24,000 a year on code 1257L, paid monthly.
Notice how close the two thresholds sit. The NI primary threshold of £1,048 a month is £12,576 a year, so income tax and National Insurance start almost in lockstep. People often assume there is a comfortable NI free zone above the tax free one. There is not.
The other thing worth knowing is that a cumulative code carries unused allowance forward. If you work part of the year, or your hours drop in a quiet month, the unused slice rolls into the next payslip. That is why a light month is sometimes followed by a payslip with unusually low tax.
Most PAYE workers get the whole thing. These are the four groups who do not.
Company car, fuel card, private medical insurance, gym membership paid by your employer. HMRC does not send you a separate bill for these, it shrinks your allowance so the tax comes out of your normal pay.
A £4,100 benefit reduces the allowance from £12,570 to £8,470, so your code drops to 847L. The tax is the same either way. What changes is that it is spread across twelve payslips rather than landing as a bill.
If HMRC found an underpayment, through a P800 calculation, unreported bank interest, or a Self Assessment reconciliation, the usual fix is a reduced allowance for the current year. Codes like 1107L or 952L almost always mean this.
Where the deductions get big enough to wipe the allowance out entirely, you move into K code territory, and the number is added to your taxable pay rather than taken off it. There is a protection here worth knowing: the regulatory limit means PAYE cannot take more than 50 per cent of your gross pay in a single pay period, however large the K number.
Your allowance is allocated to one employment. The second job usually runs on BR, which taxes every pound at 20 per cent with no allowance at all, or 0T if HMRC has no information at all about you.
If your main job pays less than £12,570 and your second job is on BR, you are almost certainly overpaying, because part of your allowance is sitting unused. Ring HMRC on 0300 200 3300 and ask them to split the allowance across both employments.
Transferring £1,260 to a spouse drops your allowance to £11,310 and your code to 1131N. Their code becomes 1383M. That is deliberate, and worth £252 a year to the household.
This is the one that catches people out on their first big bonus year.
Once your adjusted net income passes £100,000, the allowance is reduced by £1 for every £2 above the line. Since the allowance is £12,570, it is gone entirely at £125,140. HMRC sets out the rule on gov.uk.
Worked example. You earn £108,000.
857LNow look at the marginal rate on that £8,000 slice. You pay 40 per cent on the £8,000 itself, which is £3,200, plus £1,600 from the allowance you lost. That is £4,800 of tax on £8,000 of pay, an effective 60 per cent marginal rate between £100,000 and £125,140.
The standard response is a pension contribution. Putting £8,000 gross into a pension brings adjusted net income back to £100,000 and restores the full allowance, so the effective relief on that contribution is 60 per cent. Salary sacrifice does the same job and saves the National Insurance too.
Three checks, in order of how much you should trust them.
1257L is £12,570. 847L is £8,470. A K prefix means the number is a negative allowance and is being added to your taxable pay instead.If the payslip and HMRC disagree, your employer is running on an old code and payroll needs to apply the newer one. If they agree and the allowance still looks wrong for your circumstances, HMRC is the side that has to change it.
Here is what I would check first if the number surprises you: whether you have a benefit in kind you forgot about. Private medical cover added by an employer three years ago is the single most common cause of a code that nobody can explain.
The figure did not move. The personal allowance UK workers rely on has been £12,570 since April 2021, and the current plan holds it there until April 2028.
That freeze is doing quiet work. The Office for Budget Responsibility calls it fiscal drag, and it means every pay rise pulls a slightly larger share of your income into tax without any headline rate changing. Someone who has had inflation matching rises since 2021 is paying a higher effective rate today on the same real income.
The higher rate threshold of £50,270 is frozen alongside it, which is why more basic rate taxpayers cross into 40 per cent each April without doing anything differently.
The one genuine change this year is administrative. From April 2026 HMRC issues most P2 coding notices digitally rather than by post, so a change to your allowance now lands in your HMRC online account. If your code moved in April and no letter arrived, check it in your Personal Tax Account.
1257L.S on the front of the code.If you want to see what your actual allowance does to your monthly take-home, the NetPay app runs the calculation from your real hours and pay, including National Insurance, pension and student loan. Free to download.
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NetPay does this maths for every shift, invoice and payslip, automatically.
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£12,570. It has been frozen at that level since the 2021/22 tax year and is currently scheduled to stay frozen until April 2028. Most PAYE employees get all of it, which shows up on the payslip as tax code 1257L.
£12,570 a year if you have the full allowance and one job, which works out at roughly £1,047 a month or £241 a week. National Insurance is separate and kicks in at broadly the same point, so earning just above the allowance means both start at once.
Three common reasons. You get taxable benefits in kind such as a company car or private medical cover, so HMRC reduces your allowance to collect the tax. You owe tax from an earlier year and HMRC is recovering it through your code. Or you earn over £100,000, in which case the allowance tapers away at £1 for every £2 of income above that.
Yes. The allowance is set by Westminster and applies across the whole UK, so a Scottish taxpayer gets the same £12,570. What differs is the rate bands applied above it, which is why Scottish codes carry an S prefix, as in S1257L.
Want to see your actual take-home pay?
NetPay UK works out your real net pay after tax, NI, pension and salary sacrifice, for hourly, shift and variable-income workers. Free to download.
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A note on financial advice: NetPay UK calculates take-home pay based on official HMRC tax rules. This article reflects rules in force at the time of publication (29 August 2026). Tax rules change. For complex situations, consult a qualified UK accountant or visit gov.uk/income-tax.
