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 legislated to remain at this level through 2030/31. 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 with higher 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 – £16,537 | 19% |
| Basic rate | £16,538 – £29,526 | 20% |
| Intermediate rate | £29,527 – £43,662 | 21% |
| Higher rate | £43,663 – £75,000 | 42% |
| Advanced rate | £75,001 – £125,140 | 45% |
| Top rate | Above £125,140 | 48% |
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. Pension arrangements have different payroll and National Insurance effects, so this calculator does not deduct pension contributions; use the separate pension calculator for an illustration of tax relief.
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 | £26,900 | 9% |
| Plan 2 | £29,385 | 9% |
| Plan 4 (Scottish borrowers) | £33,795 | 9% |
| Plan 5 | £25,000 | 9% |
| Postgraduate Master's | £21,000 | 6% |
Payroll can deduct one undergraduate plan and a postgraduate loan at the same time. Student loan deductions are calculated per pay period. The annual figures shown here are estimates and can differ from payroll when pay varies.
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: approximately £6,882 income tax and£35,524 take-home — about £396 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, pension payroll arrangements, or high-income child benefit charge. For these, consult HMRC directly or a tax adviser.
Sources
Check the current official publications forIncome Tax rates and allowances,Scottish Income Tax bands,employee National Insurance, and student-loan repayment rules. Our methodology page records the calculation model and review process. We review the tool after relevant UK or Scottish fiscal changes.