The simple answer is £12,570 — but there are additional tax-free allowances for savings interest, dividends, trading income and more. Here’s the full picture.
The question “how much can I earn before paying tax?” is one of the most commonly searched tax questions in the UK — and the answer depends on what type of income you receive. Different income types have different tax-free allowances, and in some situations they can stack on top of each other.
The personal allowance of £12,570 is your main tax-free income allowance. You can earn up to this amount from employment, self-employment or pension income without paying income tax. Every pound above this is taxed at 20% (basic rate), 40% (higher rate) or 45% (additional rate) depending on your total income.
If you have multiple jobs, your personal allowance is split between them via your tax codes. HMRC assigns the full allowance to your main job (tax code 1257L) and a BR or D0 code to secondary jobs, which means all income from secondary jobs is taxed at the basic or higher rate from the first pound.
Calculate your exact take-home pay after tax and NI
On top of the personal allowance, you have a personal savings allowance (PSA) for interest from savings accounts, bonds and other savings products:
Interest above your PSA is added to your other income and taxed at your marginal rate. With savings rates above 4% in 2026, someone with £25,000 in savings could easily earn £1,000+ in interest — making the PSA relevant for far more people than it used to be.
Cash ISA interest is always completely tax-free and does not count toward the PSA or personal allowance. If you regularly exceed your PSA, a cash ISA is the simplest solution.
If you own shares in companies and receive dividends, the first £500 per year is tax-free under the dividend allowance. Dividends above £500 are taxed at:
Dividends inside a stocks and shares ISA are always completely tax-free, regardless of amount. Given the dividend allowance has been cut from £5,000 to £500 since 2017, sheltering dividend-paying investments inside an ISA is increasingly important.
If you earn money from self-employment, freelancing or selling things (for example on eBay or Etsy), the first £1,000 of income per year is tax-free under the trading allowance. You do not need to declare income below this threshold.
If your trading income exceeds £1,000, you must register for self assessment and declare all of it — though you can choose to deduct the £1,000 allowance instead of your actual expenses (whichever is more beneficial).
The property allowance gives you £1,000 of rental or property income tax-free per year. This covers income from renting out a parking space, driveway, or occasional room rental (below the Rent-a-Room threshold).
If you rent out a room in your home on a more substantial basis, the Rent-a-Room scheme gives you £7,500 of rental income completely tax-free — a much more generous allowance that makes casual lodger income fully exempt for most people.
In theory, if you have income from multiple sources and use all available allowances optimally, a basic rate taxpayer could receive the following tax-free in 2026/27:
Total: up to £16,070 across these income types before paying any income tax. In practice, most people only have one or two of these income streams, so the combined figure is rarely achievable — but it illustrates that the UK tax system has more generosity built in than many people realise.
State Pension and private pension income both count as taxable income and use up your personal allowance. In 2026/27, the full new State Pension is £11,973 per year — just below the personal allowance of £12,570. This means most people receiving only the State Pension pay no income tax on it.
However, if you also have a private or workplace pension on top of the State Pension, the combined income will likely exceed £12,570 and become partially taxable. The first £12,570 is still covered by the personal allowance — but amounts above that are taxed at 20%.
Pension income is not subject to National Insurance, which gives it an advantage over employment income at lower income levels.
Works for pension income too — see your tax-free amount and deductions