![\"HM](\"https:\/\/www.europesays.com\/britain\/wp-content\/uploads\/2026\/05\/hm-revenue-and-customs-sign-in-london-6899138.jpg\" "\\"HM")
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HMRC’s new tax-free Personal Allowance for 2026-27 has been confirmed (Image: Getty)<\/p>\n
Taxpayers are less than one month into the new tax year, and with it comes a reset of various allowances and tax exemptions from HMRC.<\/p>\n
Because HMRC<\/a> tax rules follow financial rather than calendar years, various allowances and thresholds run from April to April rather than January to December.<\/p>\n From Monday, April 6, everyone with an income saw their tax-free Personal Allowance limit reset, with a fresh allowance for 2026-27. It means that workers who used up their entire tax-free allowance for 2025-26 will be able to earn more tax-free money for this coming tax year.<\/p>\n Unfortunately, the bad news is that, unlike state pensions, Universal Credit<\/a> and various other benefits<\/a>, the tax-free Personal Allowance will not be increased.<\/p>\n Read more: HMRC urges 1.5 million parents to \u2018act\u2019 now or \u2018payments will stop\u2019 <\/a><\/p>\n From April 6, the tax-free Personal Allowance has been reset for the new tax year, but it will be \u00a312,570 again. This is the exact same amount it was last year, and in fact it has not been changed since 2021, when it was put up by just \u00a370.<\/p>\n It means that workers can only earn \u00a312,570 tax-free in a single year, before they must start to pay Income Tax at 20% of their income on every \u00a31 above that threshold.<\/p>\n The government explains: \u201cThe standard Personal Allowance is \u00a312,570, which is the amount of income you do not have to pay tax on.<\/p>\n \u201cExample: You had \u00a335,000 of taxable income and you got the standard Personal Allowance of \u00a312,570. You paid basic rate tax at 20% on \u00a322,430 (\u00a335,000 minus \u00a312,570).\u201d<\/p>\n With most employers are paying an inflation-based salary increase for the new tax year but the Personal Allowance still frozen, it means workers will lose 20% of their extra salary to tax, because the threshold has not been increased for inflation – in real terms, it\u2019s a stealth tax increase, and this is known as \u2018fiscal drag\u2019. What\u2019s more, the thresholds will be frozen all the way to 2031, after Chancellor Rachel Reeves<\/a> announced an extension to the existing freeze.<\/p>\n Money expert Martin Lewis explained on his live ITV1 show in November exactly how it works.<\/p>\n