HMRC Increases Personal Tax Allowance – Frozen Until 2026

The UK personal tax allowance sits at the centre of every PAYE worker’s tax calculation, yet there has been no change to this figure since the 2021/22 tax year. HMRC and the government have maintained a freeze at £12,570 for the 2025/26 tax year, with no confirmed increases through to at least 2026/27. This article examines what the freeze means in practice, why increases have not occurred, and what taxpayers need to know about future possibilities.

The personal allowance represents the amount individuals can earn before paying any income tax. For most working adults in England, Wales, and Northern Ireland, this threshold has been locked at £12,570 for several years running. The decision to extend the freeze rather than increase the allowance has drawn criticism from advocacy groups, though official government policy has remained consistent across recent administrations.

Understanding the current position matters because the allowance directly affects take-home pay, tax code assignments, and long-term financial planning. Whether someone earns £15,000 or £80,000, the personal allowance forms the foundation of their income tax calculation.

When Will the Personal Tax Allowance Increase?

As things stand, HMRC has not announced any increase to the personal tax allowance for the foreseeable future. The allowance remains frozen at £12,570 for the 2025/26 tax year, which runs from 6 April 2025 to 5 April 2026, and the same figure applies for 2026/27. Government statements indicate this freeze will continue until at least April 2031, though official confirmation for years beyond 2026/27 has not yet been published in full.

This weekly figure translates to £242 per week or approximately £1,048 per month, depending on payment frequency. HMRC applies this automatically through tax codes, most commonly the 1257L code, unless an individual qualifies for an adjustment such as Marriage Allowance or the Blind Person’s Allowance.

• The freeze means no inflation-adjusted increase for five consecutive tax years and counting.
• Fiscal drag increasingly pushes workers into higher tax brackets as wages rise with inflation.
• Pensioners on fixed incomes have been particularly affected by the loss of real-terms value.
• The taper mechanism above £100,000 creates a 60% effective marginal rate between £100,000 and £125,140.
• Scotland sets its own income tax rates and bands through the Scottish Parliament, meaning Scottish taxpayers should verify their specific thresholds.
• Wales mirrors the rest of the UK on these rates, though its basic rate band differs slightly.

Will Labour Increase the Personal Tax Allowance?

Since taking office, the Labour government has not announced any changes to the personal tax allowance freeze. The policy of maintaining £12,570 as the standard allowance has carried forward from the previous administration, with no indications in official releases that a Labour-specific increase is planned for the near term. The freeze aligns with broader fiscal strategy aimed at raising revenue without altering headline tax rates.

Critics have pointed out that the continued freeze amounts to a de facto tax increase, as inflation gradually erodes what workers can purchase with their pre-tax income. Supporters of the policy argue that maintaining current thresholds serves the government’s fiscal priorities while avoiding direct rate increases that could discourage employment or investment.

What Happens to Taxpayers Earning Above £100,000?

For individuals whose adjusted net income exceeds £100,000, the personal allowance begins to taper. The reduction works on a £1-for-£2 basis, meaning that for every £2 earned above the threshold, the personal allowance reduces by £1. This mechanism reaches its limit at £125,140, where the allowance becomes zero. The result is an effective marginal tax rate of 60% within this band, since each additional pound earned reduces the allowance and triggers tax on the lost relief.

Did HMRC Increase Personal Tax Allowance in 2023?

No increase occurred for the 2022/23 or 2023/24 tax years. The personal allowance remained at £12,570 throughout both years, continuing the freeze that began in 2021/22. The only notable threshold change during this period was the reduction of the additional rate threshold from £150,000 to £125,140 in 2023/24, which remains in place for subsequent years.

Multiple sources, including official government publications, tax advisory firms, and financial news outlets, confirm this consistency. The additional rate threshold adjustment was one of the few parameters that did change, effectively widening the higher rate band and bringing more individuals into the 45% bracket.

How to Calculate Personal Tax Allowance Impact

HMRC applies the personal allowance automatically through the PAYE system, with most employees receiving the full £12,570 via their tax code. Those with complex circumstances, such as multiple income sources or taxable benefits, may need to perform manual calculations to verify their position.

The income tax calculator available on GOV.UK allows individuals to input their specific earnings and determine their tax liability under current rates. For personalized advice tailored to individual circumstances, consulting a qualified tax professional or contacting HMRC directly remains the most reliable approach.

• Identify your gross annual income before any deductions.
• Subtract the personal allowance (£12,570) to find your taxable income.
• Apply the relevant tax bands to calculate liability at 20%, 40%, or 45%.
• Consider taper rules if income exceeds £100,000.
• Factor in Marriage Allowance if applicable, which can transfer up to £1,260 of the allowance to a spouse.
• Review your tax code annually to ensure accuracy, as changes in circumstances can affect entitlement.

Timeline: Personal Allowance Changes Since 2021

1. 2021/22 — The personal allowance froze at £12,570, marking the end of previous annual increases linked to inflation or the triple lock mechanism.
2. 2022/23 — The freeze continued with no increase, maintaining £12,570 as the standard allowance across all applicable regions.
3. 2023/24 — Another year of freeze, accompanied by a reduction in the additional rate threshold from £150,000 to £125,140.
4. 2025/26 — Confirmed freeze at £12,570 for the current tax year, with automatic application through standard tax codes.
5. 2026/27 — Government statements indicate the freeze will extend through this tax year, with no confirmed increases beyond it.

A petition calling for the personal allowance to be raised to £20,000 has attracted signatures on the Parliament petitions platform, though petitions of this nature do not automatically trigger government action. The proposal remains under discussion in advocacy circles but has not influenced official policy to date.

What Is Certain and What Remains Unclear

The Broader Context: Fiscal Drag and Its Effects

Fiscal drag refers to the phenomenon where wage growth pushes more workers into higher tax bands even though their real purchasing power may not have increased. Because thresholds remain frozen while salaries rise with inflation, workers who received pay rises may find themselves paying more tax without experiencing any improvement in their standard of living. You can find more details about the HMRC personal tax allowance freeze at GBP to INR exchange rate.

The impact falls unevenly across income groups. Lower earners who previously sat below the personal allowance threshold may cross into taxable income, while middle-income earners increasingly find themselves in the basic rate band or beyond. Pensioners on fixed state pensions face particular challenges, as their income does not benefit from employer pay rises that might otherwise track inflation.

Key Sources and Official References

Information in this article draws from official government sources including HMRC guidance, GOV.UK income tax rate publications, and Treasury announcements. Tax advisory firms including Crunch, Arb Accountants, and SJP have published detailed analyses confirming these figures. PwC’s UK tax summaries provide additional validation of rate structures and band definitions.

The personal allowance for 2025 to 2026 remains at £12,570. It has been frozen since the 2021 to 2022 tax year.

— GOV.UK, income tax rates

These sources demonstrate consistent alignment across official and professional channels, with no conflicting information regarding the current freeze or applicable rates.

Summary: Where Things Stand

The personal tax allowance stands at £12,570 with no confirmed increase for the foreseeable future. The freeze that began in 2021/22 has continued through multiple tax years, affecting take-home pay calculations for millions of workers across the UK. While the government has not announced any reversal of this policy, advocacy efforts continue to push for higher allowance levels. For individual circumstances, checking official GOV.UK resources or consulting a tax professional provides the most reliable guidance.

Those wishing to track changes to tax rates, thresholds, and allowances for the current tax year can find updated information through official channels, including HMRC publications and the tax rates, thresholds and allowances for current tax year resource.

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