Income Tax Allowance and Threshold Changes for 2026/27

The 26 November 2025 UK Budget announced the extension of the freeze to the standard Personal Allowance at £12,570 until April 2031. By default, this will also apply to the Marriage Allowance.

An administration impact of the freeze is that in 2026/27 there will be no general uplift of tax codes with the following suffixes:

• L
• M, and / or
• N

However, UK Budget 2025 did not extend the freeze to the Married Couple’s Allowance or the Blind Person’s Allowance and point 4.189 which will uprate in 2026/27 by the September 2025 CPI rate of inflation (3.8%). 

On 20 January 2026, The Income Tax (Indexation of Blind Person’s Allowance and Married Couple’s Allowance) Order 2026 sets out the increases which ICB compares with the same allowances that apply in tax year 2025/26.  Note that the Married Couple’s Allowance is an age-related allowance which has a different income limit compared to the UK-wide Personal Allowance.  The age-related allowance is reduced by £1 for every £2 of income over the income limit prescribed in the above legislation: 

For Bookkeepers

Employers may have employees in receipt of these allowances on the payroll and, therefore, WILL see a tax code change against the above suffixes.

Once all the 2026/27 rates and allowances are known, ICB will update their documentation for members.