The personal allowance is the slice of income the UK does not tax at all. For most people it is £12,570 a year, according to GOV.UK, and income tax is charged only on what you earn above it. Someone on £30,000 is therefore taxed on £17,430, not on the full salary.
Your employer learns how much allowance to give you through your tax code. The standard code 1257L is the allowance with its last digit dropped and the letter L added, as HMRC's guide to tax codes shows. A taxable benefit such as medical cover is set against the allowance, which lowers the number in the code.
The allowance is not fixed for everyone. Once adjusted net income passes £100,000 it falls by £1 for every £2 above that line and is gone entirely at £125,140. Across that stretch each extra pound costs 60p in income tax, which is why the band attracts pension contributions that bring income back under the threshold.
It works like the American standard deduction, a flat amount taken out of income before the rates apply, but there is no choice to itemise instead, and it belongs to each person rather than to a return, because UK income tax is charged on individuals rather than couples. It also lines up with National Insurance: the employee primary threshold is £12,570 a year as well, according to the 2026 to 2027 rates for employers.
The take-home pay calculator applies the allowance, tapers it above £100,000 and shows the reduced figure in the result, so you can see how much of it you keep.