UK Income Tax Bands 2026/27
The UK uses a progressive income tax system with four main bands:
| Band | Income Range | 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% |
Scotland has its own tax bands which differ from the rest of the UK.
Personal Allowance
The personal allowance is £12,570 — the amount you can earn before paying any income tax. This is frozen until at least 2028. If your income exceeds £100,000, you lose £1 of personal allowance for every £2 earned above that threshold, creating an effective 60% marginal rate between £100,000 and £125,140.
Scottish Income Tax 2026/27
Scotland sets its own income tax rates through the Scottish Parliament:
| Band | Rate |
|---|---|
| Starter rate (£12,571–£14,921) | 19% |
| Basic rate (£14,922–£26,270) | 20% |
| Intermediate rate (£26,271–£43,662) | 21% |
| Higher rate (£43,663–£75,000) | 42% |
| Advanced rate (£75,001–£125,140) | 45% |
| Top rate (over £125,140) | 48% |
National Insurance Contributions (NICs)
Income tax is only part of the picture. Employees also pay National Insurance:
- 12% on earnings between £12,570 and £50,270
- 2% on earnings above £50,270
Employers also pay 13.8% NIC on wages above £9,100 — a cost invisible to employees but significant to total employment cost.
How PAYE Works
Most UK employees pay tax through Pay As You Earn (PAYE). Your employer deducts income tax and NICs directly from each payslip based on your tax code. The standard tax code for 2026/27 is 1257L, reflecting the £12,570 personal allowance.
Effective vs Marginal Tax Rate
Understanding the difference matters for financial planning:
- Marginal rate: Tax rate on your next pound of income (20%, 40%, or 45%)
- Effective rate: Total tax paid ÷ total income (always lower than marginal)
A £60,000 salary has a 40% marginal rate but only a ~25% effective income tax rate when the personal allowance and basic-rate band are factored in.
Tax-Free Ways to Reduce Your Bill
- Pension contributions: Employer contributions are free of income tax and NIC. Employee contributions get tax relief at your marginal rate.
- ISA allowance: Up to £20,000/year invested in an ISA grows completely free of income tax and capital gains tax.
- Gift Aid: Charitable donations via Gift Aid reclaim basic-rate tax. Higher-rate taxpayers can claim additional relief via self-assessment.
- Salary sacrifice: Benefits like cycle-to-work schemes or additional pension contributions reduce your taxable salary.
Use our UK Salary Tax Calculator to see your exact take-home pay after all deductions.