For the 2026/27 UK tax year, an individual has adjusted net income of £110,000. Under HMRC's Personal Allowance taper rules, what happens to their Personal Allowance?
- It is unaffected, because the taper only applies above £125,140
- It is reduced by £1 for every £2 of adjusted net income above £100,000, cutting the standard £12,570 allowance to £7,570
- It is reduced to zero immediately once adjusted net income exceeds £100,000
- It increases because of marginal relief on income above £100,000
Correct answer: B. It is reduced by £1 for every £2 of adjusted net income above £100,000, cutting the standard £12,570 allowance to £7,570
HMRC reduces the Personal Allowance by £1 for every £2 of adjusted net income above £100,000; at £110,000 of adjusted net income, that is £10,000 over the threshold, producing a £5,000 reduction that brings the standard £12,570 allowance for 2026/27 down to £7,570, which is exactly what the second option describes. The first option is wrong because £125,140 is the point where the allowance reaches zero, not where the taper begins; tapering starts at £100,000. The third option wrongly assumes an all-or-nothing cliff edge rather than the gradual £1-per-£2 withdrawal HMRC actually applies as income rises. The fourth option is wrong because there is no marginal relief that increases the allowance in this income range; rather, the interaction of the withdrawn allowance with the underlying 40% tax band is precisely what creates the well-known 60% effective marginal tax rate that applies to income between £100,000 and £125,140.
Source: GOV.UK: Income Tax rates and Personal Allowances — how the Personal Allowance is reduced