Income Tax Bands 2025/26
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 2025/26, 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.
How to Reduce Your Tax
The most common legal ways to reduce your tax bill include salary sacrifice into a pension (especially useful near the £100k threshold), using your full ISA allowance (£20,000/year), marriage allowance transfer (worth up to £252/year), and claiming allowable expenses if you work from home.