UK Personal Allowance Increase – Frozen Until 2028

The UK personal tax allowance has been frozen at £12,570 since 2021, with no increase currently scheduled until April 2028. This guide explains the current position, historical changes, and what taxpayers need to know about future possibilities.

The personal allowance forms the tax-free portion of income that every UK worker can earn before paying income tax. For the tax years 2026-27 and 2027-28, this amount remains unchanged at £12,570, despite ongoing discussions about raising the threshold to £20,000 through public petitions.

Understanding how the freeze affects you requires knowing both the current thresholds and the legislative history behind this policy decision. The following sections break down the key facts, timeline, and practical implications for UK taxpayers.

When will the personal tax allowance increase?

Under current legislation, there is no planned increase to the personal tax allowance until after April 2028. The government froze the personal allowance at £12,570 for the tax years 2026-27 and 2027-28, a measure that was first announced in the Spring Budget of 2021 and subsequently extended in the Autumn Statement of 2022.

The freeze applies to all individual taxpayers across most of the UK, with only minor variations for Scottish non-savings income. This policy operates by raising revenue through fiscal drag rather than by directly increasing tax rates. As wages rise with inflation while thresholds remain static, more earners find themselves pushed into higher tax bands without any change to their nominal tax rate.

The extension from April 2026 to April 2028 was projected to add more than £1.2 billion in revenue by 2028, according to official costings. Proposals from the Resolution Foundation have suggested extending the freeze further to 2030, which could raise approximately £12.2 billion, though this remains a proposal rather than government policy.

Key Thresholds for 2026-27 and 2027-28

• Personal Allowance: £12,570
• Basic Rate Limit: £37,700
• Higher Rate Threshold: £50,270 (Personal Allowance plus Basic Rate Limit)
• National Insurance Primary Threshold: £12,570 (aligned with Personal Allowance)

Higher earners should note that the personal allowance tapers for those earning above £100,000, creating an effective 60% marginal rate between £100,000 and £125,000. The Upper Earnings Limit and Upper Profits Limit remain aligned with the Higher Rate Threshold until 2027-28.

What is the current UK personal allowance and has it increased to £20,000?

The current UK personal allowance stands at £12,570 for the 2026-27 tax year. Despite public campaigns and a parliamentary petition calling for the allowance to be raised to £20,000, no such increase has been implemented or announced by the government. The petition, hosted on the official parliamentary website, gathered signatures advocating for this change, but it had not reached the 100,000 threshold required for a parliamentary debate at the time of writing.

The £20,000 figure remains aspirational rather than policy. The parliamentary petition calling for this level attracted public support but had not progressed through parliamentary procedure to become government policy as of April 2026. Official rates continue to be published on GOV.UK with the £12,570 figure confirmed for the foreseeable future.

UK personal allowance history and recent changes

The personal allowance was last meaningfully increased in the 2021-22 tax year, when it was set at £12,570 and then frozen. Prior to the freeze, the allowance had been rising steadily each year in line with the Consumer Prices Index, a pattern that was broken by the March 2021 Budget announcement.

The Initial Freeze (Spring Budget 2021)

The March 2021 Budget introduced the threshold freeze, overriding the usual CPI uplifts that had previously applied. This decision froze the personal allowance, basic rate limit at £37,700, higher rate threshold at £50,270, and various National Insurance thresholds including the Upper Earnings Limit and Upper Profits Limit.

The Finance Act 2021 legislated this initial freeze, which was originally intended to run until April 2026. The policy was designed to raise revenue without directly increasing tax rates, operating instead through fiscal drag as wages grow and thresholds remain fixed.

Extension to April 2028 (Autumn Statement 2022)

The Autumn Statement 2022 extended the freeze period by two additional years, pushing the end date to April 2028. This extension was legislated through the Autumn Finance Bill 2022 and confirmed additional revenue projections exceeding £1.2 billion by 2028.

From April 2023, the National Insurance Primary Threshold, Lower Profits Limit, and Class 2 Lower Profits Threshold were aligned with the personal allowance at £12,570, creating consistency across income tax and National Insurance calculations.

UK personal allowance increase calculator: How to check your tax

While no dedicated calculator specifically models the freeze’s cumulative impact, several tools can help you estimate how much tax you pay under current thresholds. The official GOV.UK website provides income tax rates and bands alongside general calculators for personal circumstances.

Third-party resources from tax advisory firms offer adjusted net income tools that factor in pension contributions, Gift Aid donations, and dividend income. These calculations help determine how much of your personal allowance you might retain if your income exceeds £100,000.

Modelling platforms such as PolicyEngine provide capabilities for extension scenarios, including analyses of proposals to extend the freeze to 2030 and the revenue implications. These tools use official government data but represent analytical projections rather than official government calculators.

Factors That Affect Your Personal Allowance

• Pension contributions reduce adjusted net income
• Gift Aid donations lower taxable income
• Dividend timing can affect annual tax liability
• Child benefit begins to taper from £60,000 adjusted net income
• Blind person’s allowance provides additional tax-free income

For those with income above £100,000, the gradual withdrawal of the personal allowance creates an effective marginal rate of 60% between £100,000 and £125,000. Strategic pension contributions or charitable donations can help preserve more of your allowance by reducing adjusted net income.

Timeline of personal allowance freezes

Understanding the progression of this policy helps contextualise its impact on UK taxpayers.

1. March 2021: Chancellor announces threshold freeze in Spring Budget, overriding CPI uplifts. Finance Act 2021 legislates freeze until April 2026.
2. April 2023: National Insurance thresholds align with personal allowance at £12,570 as part of broader reform.
3. November 2022: Autumn Statement extends freeze to April 2028, adding two tax years to the policy duration.
4. 2026-27 and 2027-28: Final years of confirmed freeze period with thresholds at £12,570 (PA), £37,700 (basic rate limit), and £50,270 (higher rate threshold).
5. April 2028 onwards: CPI indexation scheduled to resume under current legislation unless further changes are announced.

What is certain and what remains unclear

Why the freeze matters for UK taxpayers

The personal allowance freeze represents a significant shift in tax policy that affects virtually every UK worker. Rather than raising rates directly, the government achieves higher revenue collection through fiscal drag, where stagnant thresholds mean more income becomes taxable as wages grow.

For lower and middle-income earners, the freeze means that inflation erodes the real value of the tax-free allowance each year. A household earning £25,000 in 2026 pays tax on a larger proportion of their income in real terms than they would have in 2021, despite the nominal threshold remaining unchanged.

Higher-rate taxpayers face additional considerations. The interaction between frozen thresholds and the personal allowance taper creates complex planning opportunities. Those earning between £100,000 and £125,000 face an effective marginal rate of 60%, and strategic use of pension contributions or Gift Aid can significantly reduce this burden.

Sources and official positions

The government has confirmed the personal allowance position through official publications on GOV.UK, which establish the £12,570 figure for tax years 2026-27 and 2027-28. These documents also specify the alignment of National Insurance thresholds and the legislative framework through the Finance Act 2021 and subsequent Autumn Finance Bill 2022.

HM Revenue and Customs guidance confirms the personal allowance at £12,570 and basic rate limit at £37,700 for income tax and certain National Insurance contributions thresholds from 6 April 2026 to 5 April 2028.

Tax advisory firms including Deloitte have analysed the freeze’s impact on taxpayers, noting that by April 2028, the personal allowance will have been static for seven years since 2021 levels. The Institute for Fiscal Studies has published research on how frozen tax thresholds are reshaping who pays personal taxes.

Analysis from the Institute for Fiscal Studies indicates that frozen thresholds pull more earners into higher bands through fiscal drag, with minimal behavioural responses factored into official costings.

A public petition hosted on the parliamentary website has advocated for raising the allowance to £20,000, representing grassroots pressure for change. Proposals from the Resolution Foundation have suggested extending the freeze to 2030 as a revenue-raising measure, though this has not been adopted as government policy.

Summary

The UK personal tax allowance remains frozen at £12,570 until April 2028, with no increase currently planned during this period. The higher rate threshold stays at £50,270 and the basic rate limit at £37,700 for tax years 2026-27 and 2027-28. Proposals to raise the allowance to £20,000 have been advocated through parliamentary petition, but current law contains no such provision. After April 2028, CPI indexation is scheduled to resume unless future legislation changes the position.

For those seeking to understand their tax position or explore ways to reduce their adjusted net income, the official GOV.UK resources and tax calculators provide the most reliable starting point. Understanding how pension contributions, charitable donations, and dividend timing affect your tax liability becomes increasingly valuable as the freeze continues.