Income Tax Bands 2026/27
The UK uses a progressive tax system — you don't pay the same rate on all your income. Instead, different portions of your income are taxed at different rates. Here's how it works.
| Band | Taxable Income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 – £50,270 | 20% |
| Higher Rate | £50,271 – £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
The Personal Allowance
Everyone gets a tax-free personal allowance of £12,570. This means the first £12,570 you earn each year is completely tax-free. You only start paying income tax on earnings above this amount.
How Tax Bands Actually Work
A common misconception is that moving into the higher rate band means ALL your income is taxed at 40%. This isn't true. Only the income within each band is taxed at that band's rate.
Example: £50,000 salary
First £12,570 = £0 tax (personal allowance)
Next £37,430 (£12,571 to £50,000) = £7,486 tax (20%)
Total tax: £7,486 — an effective rate of just 15%
The £100,000 Trap
One of the most misunderstood parts of UK tax is what happens between £100,000 and £125,140. For every £2 you earn over £100,000, you lose £1 of your personal allowance. This creates an effective 60% marginal tax rate on income in this range.
For example, earning £110,000 means your personal allowance is reduced by £5,000 (to £7,570), costing you an extra £2,000 in tax compared to what you'd expect. This is why many people use salary sacrifice or pension contributions to stay below £100,000.
National Insurance
On top of income tax, you also pay National Insurance. For employees in 2026/27, NI is 8% on earnings between £12,570 and £50,270, then 2% on everything above £50,270.
Your Combined Marginal Rate
| Income Range | Income Tax | NI | Combined |
|---|---|---|---|
| Up to £12,570 | 0% | 0% | 0% |
| £12,571 – £50,270 | 20% | 8% | 28% |
| £50,271 – £100,000 | 40% | 2% | 42% |
| £100,001 – £125,140 | 60% | 2% | 62% |
| Over £125,140 | 45% | 2% | 47% |
See exactly how much you take home on your salary
Use our salary calculator →Scottish Income Tax
Scotland has its own income tax rates which differ from the rest of the UK. Scotland has six bands: starter (19%), basic (20%), intermediate (21%), higher (42%), advanced (45%), and top (48%). The thresholds also differ. Our calculator uses England/Wales/NI rates by default.
Tax Bands Worked Example: £35,000 Salary
Let's break down exactly how much income tax you pay on a £35,000 salary in 2026/27:
Personal Allowance: First £12,570 = £0 tax
Basic Rate (20%): £35,000 − £12,570 = £22,430 × 20% = £4,486
Total income tax: £4,486
Effective tax rate: 12.8%
Even though you're in the basic rate band, your effective rate is only 12.8% — well below 20% — because your personal allowance shields the first £12,570 from tax entirely.
Tax Bands Worked Example: £60,000 Salary
At £60,000, you cross into the higher rate band. Here's how the tax is split across bands:
Personal Allowance: First £12,570 = £0 tax
Basic Rate (20%): £37,700 (£12,571 to £50,270) × 20% = £7,540
Higher Rate (40%): £9,730 (£50,271 to £60,000) × 40% = £3,892
Total income tax: £11,432
Effective tax rate: 19.1%
Despite earning in the higher rate band, your effective rate is 19.1% — not 40%. You only pay 40% on the slice of income above £50,270.
Scotland vs England Tax Bands 2026/27
Scotland sets its own income tax rates, which are more complex than the rest of the UK. While England, Wales, and Northern Ireland have 3 tax bands (20%, 40%, 45%), Scotland has 6 bands ranging from 19% to 48%. Scottish rates are: Starter (19%), Basic (20%), Intermediate (21%), Higher (42%), Advanced (45%), and Top (48%). The thresholds also differ, meaning Scottish taxpayers on the same salary can pay more or less depending on their income level. Use our salary calculator to compare.
How to Reduce Your Tax Band
Pension contributions: Money paid into a pension reduces your taxable income. A higher rate taxpayer contributing £5,000 to a pension saves £2,000 in tax — and stays below the higher rate threshold if they're near the boundary.
Salary sacrifice: Agreeing with your employer to exchange part of your salary for pension contributions or other benefits reduces your gross pay for tax purposes. This also saves on National Insurance for both you and your employer. See our salary sacrifice calculator.
Marriage allowance: If your spouse earns under £12,570, they can transfer £1,260 of their unused personal allowance to you, saving up to £252 per year. You must be a basic rate taxpayer to claim.