Tax

Every UK Tax Allowance You Should Know About in 2026/27

SYM

The UK tax system has multiple allowances designed to help you keep more of your money — but most people only know about the big one (the £12,570 Personal Allowance). In reality, there are allowances for savings interest, dividends, property income, trading income, capital gains, and more. Understanding and using these properly can save you hundreds or even thousands of pounds a year. Here's your complete guide to every tax allowance worth knowing about in 2026/27.

Income and Employment Allowances

The Personal Allowance remains at £12,570 — the amount you can earn before paying any income tax. But it's not the only employment-related allowance. The Marriage Allowance lets you transfer £1,260 of unused Personal Allowance to a spouse or civil partner who's a basic-rate taxpayer, saving up to £252 per year. You can also backdate this for up to 4 years, meaning a lump sum of up to £1,008 if you've never claimed. Around 2.4 million eligible couples still haven't claimed.
  • •Personal Allowance: £12,570 tax-free income
  • •Marriage Allowance: transfer £1,260 to spouse (saves £252/year)
  • •Blind Person's Allowance: £3,070 extra tax-free income
  • •Employment Allowance: £5,000 off employer NI (for small businesses)
Can I claim Marriage Allowance if my partner earns more?+

The lower earner (who doesn't use their full Personal Allowance) transfers to the higher earner. The higher earner must be a basic-rate taxpayer. It won't work if either partner pays higher-rate tax.

Savings and Investment Allowances

The Personal Savings Allowance lets basic-rate taxpayers earn £1,000 in savings interest tax-free, and higher-rate taxpayers £500. Beyond that, the starting rate for savings gives an additional £5,000 allowance if your non-savings income is below £17,570. The Dividend Allowance is £500 tax-free for everyone. And of course, the ISA allowance of £20,000 means all growth inside an ISA is completely tax-free — indefinitely.
  • •Personal Savings Allowance: £1,000 (basic rate) / £500 (higher rate)
  • •Starting Rate for Savings: up to £5,000 extra if income below £17,570
  • •Dividend Allowance: £500 tax-free
  • •ISA Allowance: £20,000 per year (all growth tax-free)
  • •Capital Gains Tax Annual Exempt Amount: £3,000

Property and Trading Allowances

If you earn money from a side hustle or rent out property, there are specific allowances. The Trading Allowance gives you £1,000 tax-free from self-employment or casual trading — perfect if you sell on eBay or do freelance work. The Property Allowance gives another £1,000 tax-free from property income (useful for renting out a parking space or room). The Rent a Room Scheme goes further: you can earn up to £7,500 tax-free per year by renting out a furnished room in your home.
  • •Trading Allowance: £1,000 tax-free from self-employment/side hustles
  • •Property Allowance: £1,000 tax-free from property income
  • •Rent a Room Scheme: up to £7,500 tax-free for renting a furnished room
  • •No need to register for self-assessment if you stay within these limits
Do I need to declare income below the trading allowance?+

No. If your total trading income is under £1,000, you don't need to tell HMRC or file a tax return for it. The same applies to the property allowance.

How to Make the Most of Your Allowances

The key is stacking allowances. A couple where one partner earns less could use the Marriage Allowance plus ISAs plus the Trading Allowance to shelter a significant amount of income from tax. Review your situation annually — especially around the end of the tax year in April. Use SYM to track your savings goals and ensure you're using your ISA allowance before the deadline. Many of these allowances are use-it-or-lose-it, so planning ahead is essential.
  • •Review all applicable allowances at the start of each tax year
  • •Use Marriage Allowance if eligible (backdate up to 4 years)
  • •Max out your ISA before the April deadline
  • •Keep side hustle income under £1,000 to avoid tax returns
  • •Use Capital Gains exempt amount if selling investments
#tax allowances#HMRC#tax efficiency#uk finance

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