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What is Personal Allowance?
Last verified 23 October 2026
The Personal Allowance is the amount of income you can receive each tax year before paying Income Tax. The standard Personal Allowance is £12,570.
Why it matters to landlords
It applies to your total taxable income, so rental profit, wages, pensions and self-employment profit all count against it. If your other income already uses the full allowance, every pound of rental profit is taxed at your marginal rate. The same £12,570 figure is used for Scottish and Welsh taxpayers, although the bands above it can differ in Scotland.
Your Personal Allowance goes down by £1 for every £2 of adjusted net income above £100,000, so it reaches zero at £125,140. Rental profit counts towards that figure. A landlord whose rental profit pushes them above £100,000 can therefore pay a much higher effective rate on that slice of income. Tax planning around this point is worth discussing with a tax adviser.
Example
A landlord earns a £30,000 salary and makes £8,000 rental profit, so total income is £38,000. After the £12,570 allowance, £25,430 is taxable. If adjusted net income were £110,000 instead, the allowance would fall by £5,000 to £7,570.
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