Sunita Somvanshi
If you're trying to work out whether your tax bill is about to drop, here's the number that actually matters right now: £12,570. That's still the official UK Personal Allowance for 2026-27, even though reports suggest the government is weighing a rise to £15,570 ahead of the Autumn Budget.
HMRC confirms the current Personal Allowance — the amount you can earn before paying income tax — stands at £12,570 for the 2026-27 tax year, and legislation keeps it frozen at that level through 2030-31. The £15,570 proposal originated with Labour donor and Ecotricity founder Dale Vince, and Prime Minister Andy Burnham and Chancellor John Healey are reportedly considering it, though it has not been confirmed as government policy. A Treasury spokesperson told Sky News the government does not routinely comment on tax speculation ahead of fiscal events, and has not confirmed the £15,570 figure.
Until the government confirms a change through the Budget or new legislation, readers should calculate their finances using the existing £12,570 allowance rather than the rumoured £15,570 figure. Anyone budgeting around next year's take-home pay, including pensioners whose state pension is approaching the current threshold, risks planning around a number that is not yet law.
What a £15,570 Allowance Would Actually Save You
The Personal Allowance is the slice of income you keep entirely tax-free before the basic rate kicks in. NIESR modelling commissioned by Dale Vince, and reported by The Telegraph, estimated that raising the allowance by £3,000 could leave the bottom fifth of earners around £600 a year better off. That figure is modelled distributional analysis rather than simple tax arithmetic applying to every low earner. Analysts have also floated aligning capital gains tax more closely with income tax rates, and ending interest payments on Bank of England reserves, as possible ways to fund the change. Fiscal drag is the mechanism that makes this story matter even without a change: because the £12,570 threshold has been frozen since 2021 while wages and state pensions have risen, more people have been pulled into paying income tax as nominal incomes rise against the frozen threshold.
Why the Threshold Freeze Is the Real Story for Now
The frozen threshold, not the proposed rise, is what's actually affecting pay packets today. The full new state pension is expected to exceed £12,570 from April 2027, but the government has separately said pensioners whose only income is the state pension will not be made to pay the resulting tax during the current Parliament. Anyone with even a small amount of additional income, such as a workplace pension, would not be covered by that exemption and could still face a tax bill.
Capital gains tax is the other lever under discussion. Aligning CGT more closely with income tax rates has been floated as a way to fund the allowance increase, which would primarily affect higher earners and investors with significant capital gains, rather than the average worker benefiting from the allowance rise itself.
Frequently Asked Questions
Could the UK Personal Allowance rise to £15,570?
Potentially, but it remains only a reported proposal. HMRC's current Personal Allowance is £12,570 for 2026-27, and the Treasury has not confirmed a £15,570 threshold ahead of the Autumn Budget.
For now, £12,570 remains the confirmed UK Personal Allowance, frozen through 2030-31 under existing legislation. A £15,570 rise is under discussion as part of Budget planning but has not been confirmed by the Treasury. The Autumn Budget is expected to clarify the government's decision — check back for updates once it's announced.
