The 20% income tax rate applied to taxable income between £0 and £37,700 (above your personal allowance). This covers earnings from £12,571 to £50,270.
Understanding the Basic Rate Band
The basic rate of income tax is 20% and applies to taxable income between £12,571 and £50,270 for the 2025/26 tax year. This is the rate most UK workers pay on the majority of their earnings.
Combined with National Insurance at 8%, the effective deduction rate in the basic rate band is approximately 28%, meaning you keep 72p of every pound earned in this range. If your entire salary falls within this band (up to £50,270 gross), all your taxable income is at this single rate.
Understanding where the basic rate ends is crucial for tax planning. Once you cross £50,270, additional income is taxed at the higher rate of 40%. Salary sacrifice into your pension can keep you in the basic rate band.
How Basic Rate Works in Practice
The basic rate of income tax is 20%, applied to taxable income between £12,571 and £50,270 (for 2025/26). This means the first £12,570 is tax-free (Personal Allowance), and the next £37,700 is taxed at 20%. Most UK taxpayers are basic rate taxpayers — approximately 80% of income tax payers fall entirely within this band.
Practical Tips
As a basic rate taxpayer, every £1 of gross salary gives you approximately 72p after income tax (20%) and National Insurance (8%). Pension contributions at the basic rate receive 20% tax relief — meaning a £100 pension contribution costs you £80 in take home pay. Gift Aid donations also receive 20% relief automatically.
Related Topics
The basic rate band has been frozen since 2021. As wages increase, more workers are pushed into the higher rate band — a process known as fiscal drag.
See how this affects your take home pay
Salary calculator →