Personal Allowance in Real Terms 2010–2027 — UK Erosion Analysis
Original analysis of how the UK Personal Allowance has eroded in real terms from 2010-11 to 2027-28. Year-by-year nominal vs CPI-adjusted real value, the post-2022 freeze, and what it costs the median earner.
Year-by-year table
Tax year
PA (nominal)
CPIH (2010 = 100)
PA in 2010 £
vs 2010 baseline
2010-11
£6,475
100.0
£6,475
+0.0%
2011-12
£7,475
103.9
£7,194
+11.1%
2012-13
£8,105
106.5
£7,610
+17.5%
2013-14
£9,440
109.0
£8,661
+33.8%
2014-15
£10,000
110.5
£9,050
+39.8%
2015-16
£10,600
111.0
£9,550
+47.5%
2016-17
£11,000
112.1
£9,813
+51.6%
2017-18
£11,500
115.0
£10,000
+54.4%
2018-19
£11,850
117.6
£10,077
+55.6%
2019-20
£12,500
119.6
£10,452
+61.4%
2020-21
£12,500
120.9
£10,339
+59.7%
2021-22
£12,570
123.9
£10,145
+56.7%
2022-23
£12,570
133.7
£9,402
+45.2%
2023-24
£12,570
142.7
£8,809
+36.0%
2024-25
£12,570
147.5
£8,522
+31.6%
2025-26
£12,570
153.2
£8,205
+26.7%
2026-27 (projection)
£12,570
156.7
£8,022
+23.9%
2027-28 (projection)
£12,570
159.8
£7,866
+21.5%
"vs 2010 baseline" = real-term gain/loss against the 2010-11 PA of £6,475 expressed in 2010 pounds. Positive = the real PA is higher than the 2010 baseline. Negative = real value has fallen below the 2010 starting point. CPIH is the ONS L522 annual average for the calendar year each tax year starts in. 2026 and 2027 have no published annual average yet, so those two rows are projections: the 2025 average grown by the OBR's March 2026 CPI inflation forecast (2.3% in 2026, 2.0% in 2027). The table stops at 2027-28 (the original Autumn Statement 2022 freeze horizon); the freeze was extended a further three years to April 2031 by Autumn Budget 2025, so £12,570 nominal — and further real-terms erosion — continues beyond this table through 2030-31.
Why this matters
A frozen Personal Allowance is a stealth tax rise. If the £12,570 had been CPI-indexed from 2021-22 using the CPIH figures in the table above, it would be approximately £15,900 by 2026-27 and £16,210 by 2027-28 (both projections). Every £1,000 of the gap is taxed at 20% basic rate (or 40% higher rate above £50,270) — a structural tax increase that compounds with the frozen higher-rate threshold, and one that now runs three years longer than originally legislated.
The freeze is one of the largest implicit tax rises in modern UK history measured in expected revenue. The OBR's November 2022 EFO estimated that freezing the Personal Allowance and higher-rate threshold to 2027-28 would raise £26 billion a year by 2027-28 relative to CPI-indexed thresholds (£35 billion including the matching National Insurance threshold freezes), without ever appearing as a rate change in the Budget. Autumn Budget 2025 extended the freeze to April 2031. The OBR's latest estimate, in its March 2026 EFO detailed forecast tables (receipts, Tables 3.17 and 3.18), puts the yield of the Personal Allowance and higher-rate threshold freezes at £38.5 billion in 2027-28 and £55.2 billion in 2030-31, with 3.7 million people brought into higher-rate tax by 2027-28 and 4.8 million by 2030-31. See the companion UK Fiscal Drag 2026-27 analysis for the full breakdown.
The Personal Allowance is the amount of income you can earn each year before any income tax is due. For 2025-26 and 2026-27 it is £12,570 — frozen at this level since 2021-22, originally confirmed frozen until April 2028 in the Autumn Statement 2022, then extended a further three years to April 2031 by Autumn Budget 2025.
What does "real terms" mean here?
Real terms means adjusted for inflation. We rebase the ONS CPIH (CPI including owner-occupiers' housing) annual average index to 100 at 2010-11. The Personal Allowance is then divided by the index and multiplied by 100 to express it in 2010-11 pounds. Source: ONS Consumer Prices.
Has the Personal Allowance kept up with inflation?
Up to 2019-20 the PA grew faster than inflation — from £6,475 in 2010-11 to £12,500 in 2019-20, well above the CPIH-adjusted equivalent. Since the freeze in 2021-22, the real value has fallen back. By 2027-28 the £12,570 PA will be worth approximately £7,866 in 2010-11 pounds — slightly more than the original £6,475, but materially less than the £12,500 high point reached in 2019-20.
What does the freeze cost a median earner?
The OBR estimated in its November 2022 Economic and Fiscal Outlook that the income tax threshold freeze would create around 3.2 million additional taxpayers by 2027-28 and bring 2.6 million people into higher-rate tax versus indexation. The OBR's latest estimate, in its March 2026 Economic and Fiscal Outlook detailed forecast tables, puts the figures for 2027-28 at 5.2 million and 3.7 million. For an individual basic-rate taxpayer on median full-time earnings (£39,039 in April 2025, ONS ASHE), the lost relief vs a CPIH-indexed PA is about £728 in 2027-28: the PA would be £16,210 instead of £12,570, and the £3,640 gap is taxed at 20% (a projection, since 2027 CPIH is forecast).
Where did the PA values come from?
HMRC historical income tax rates and allowances tables. The 2026-27 and 2027-28 figures are confirmed frozen at £12,570 by Autumn Statement 2022, and the freeze now continues at £12,570 through April 2031 following Autumn Budget 2025.
What about Scottish income tax?
The Personal Allowance is reserved (set by Westminster) and applies UK-wide. Scotland uses the same £12,570 figure. The Scottish Government sets the income tax bands above the PA via the Scotland Act 2016 powers — see England vs Scotland tax comparison.
Did the freeze end in April 2028 as originally planned?
No. Before it reached the April 2028 end-date, Autumn Budget 2025 extended the freeze a further three years, to April 2031. The Personal Allowance will stay at £12,570 for the whole of that period. The OBR's latest (March 2026) forecast runs only to 2030-31, so the policy from April 2031 is not yet fixed — and the planned end-date has already been moved once.
Can I cite this analysis?
Yes. This page is published under CC-BY 4.0 with attribution. Please link to the page URL when citing — corrections then flow back to us. The underlying data points are all from gov.uk and ONS.
Re-publishable under CC-BY 4.0. Please link back to this URL so corrections propagate.
