How UK income tax works in 2026/27
UK income tax is a progressive tax on your earnings. The Personal Allowance — the amount you can earn before paying any tax — is£12,570 for 2026/27, frozen at this level since 2021/22 and due to remain frozen until 2028/29. Above the allowance, income is taxed in bands at 20% (basic rate), 40% (higher rate), and 45% (additional rate). The band thresholds differ between England/Wales/NI and Scotland.
2026/27 income tax bands — England, Wales, Northern Ireland
| Band | Income range | Rate |
|---|---|---|
| Personal Allowance | £0 – £12,570 | 0% |
| Basic rate | £12,571 – £50,270 | 20% |
| Higher rate | £50,271 – £125,140 | 40% |
| Additional rate | Above £125,140 | 45% |
2026/27 Scottish income tax bands
Scotland uses a six-band system that is more granular but ends at similar top rates. Scottish income tax applies to non-savings, non-dividend income only — savings and dividends are still taxed under UK-wide rules.
| Band | Income range | Rate |
|---|---|---|
| Personal Allowance | £0 – £12,570 | 0% |
| Starter rate | £12,571 – £14,732 | 19% |
| Basic rate | £14,733 – £25,688 | 20% |
| Intermediate rate | £25,689 – £43,662 | 21% |
| Higher rate | £43,663 – £125,140 | 42% |
| Top rate | Above £125,140 | 47% |
The Personal Allowance taper — the 60% tax trap
For incomes above £100,000, the Personal Allowance is reduced by £1 for every £2 of income above £100,000. The allowance reaches zero at an income of £125,140. The effect: a £1 pay rise in the £100,000–£125,140 band costs you 40p in higher-rate tax plus 20p from the lost Personal Allowance — an effective marginal rate of 60%. This is the highest marginal rate in the UK system, higher than the 45% additional rate above £125,140.
The most common way to mitigate the taper is to increase pension contributions. Pension contributions reduce your adjusted net income for taper purposes — so a £25,000 gross pension contribution at £125,000 salary drops your income to £100,000 and fully restores the Personal Allowance. The calculator applies this automatically when you enter a pension percentage.
National Insurance — the second income tax
National Insurance (NI) is technically a separate tax from income tax but functions as a second charge on earnings. Class 1 NI for employees in 2026/27 is:
| Earnings band | Rate |
|---|---|
| £0 – £12,570 (Primary Threshold) | 0% |
| £12,571 – £50,270 (Upper Earnings Limit) | 8% |
| Above £50,270 | 2% |
NI only applies to employment income — it does not apply to pension income, savings interest, or dividends. Self-employed people pay Class 2 and Class 4 NI instead, which this calculator does not model.
Student loan repayments — the third deduction
If you have a UK student loan, repayments are deducted through PAYE on your gross income above the plan threshold. The plan you are on depends on when and where you studied:
| Plan | 2026/27 threshold | Rate |
|---|---|---|
| Plan 1 (pre-2012 English/Welsh; all NI and Scottish pre-2024) | £26,065 | 9% |
| Plan 2 (post-2012 English/Welsh) | £27,295 | 9% |
| Plan 4 (Scottish only) | £32,017 | 9% |
| Postgraduate Master's | £21,000 | 6% |
Student loan repayments are calculated on gross income, not on income after pension relief — so paying more into your pension does not reduce your student loan deductions.
Worked example — £45,000 in England, no pension, no student loan
Personal Allowance: £12,570. Taxable income: £32,430. Income tax: 20% of £32,430 = £6,486. NI: 8% of (£45,000 − £12,570) = 8% of £32,430 = £2,594. Take-home: £45,000 − £6,486 − £2,594 =£35,920. Effective rate: 20.2%.
The same £45,000 in Scotland produces slightly more tax because of the additional bands: £6,938 income tax, take-home£35,468 — about £450 less than in England.
What this calculator does not cover
This calculator models Class 1 NI on employment income only. It does not cover: self-employed Class 2/4 NI, capital gains tax, dividend tax, marriage allowance transfers, Scottish Carer's Allowance supplements, benefits-in-kind, company car tax, salary sacrifice (vs relief at source pension), or high-income child benefit charge. For these, consult HMRC directly or a tax adviser.
Data sourced from HMRC and Revenue Scotland publications listed on ourmethodology page. Updated within one week of any rate change announced by the Chancellor or Scottish Budget.