UK tax brackets — officially called income tax bands — decide how much tax you pay on each slice of your income. This guide covers the 2025/26 rates, which ran from 6 April 2025 to 5 April 2026. Thanks to the government's threshold freeze, the same brackets carry into the 2026/27 tax year. Whether you are employed, self-employed, or running a business, here is exactly how your income tax is calculated, with clear worked examples.
UK Tax Brackets 2025/26 at a Glance
UK income tax operates on a banded system. You pay different rates on different portions of your income — and you only pay the higher rate on the portion that falls into each band, not on your entire income.
| Band | Income Range | Tax Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 to £50,270 | 20% |
| Higher Rate | £50,271 to £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
These rates apply to England, Wales, and Northern Ireland. Scotland has its own income tax rates which differ from the rest of the UK — particularly at the basic and higher rate thresholds.
The Personal Allowance — What It Means
The personal allowance is the amount you can earn each year completely free of income tax. For 2025/26 it is £12,570.
This means the first £12,570 of your income is tax-free. Only earnings above this threshold are subject to income tax.
Important: The personal allowance tapers away for high earners. For every £2 you earn above £100,000, you lose £1 of personal allowance. This means:
- At £100,000 income, your personal allowance starts reducing
- At £125,140 income, your personal allowance is reduced to zero
- This creates an effective 60% marginal tax rate on income between £100,000 and £125,140
If your income is between £100,000 and £125,140, you may be paying an effective marginal rate of 60% on that portion of your income. This is a significant trap that pension contributions and other allowances can help you avoid — speak to a qualified accountant.
How Income Tax Is Calculated — A Worked Example
This is where many people go wrong. You do not pay 40% on your entire salary just because you earn over £50,270. You pay 40% only on the income above £50,270.
Example: £65,000 salary
| Portion | Amount | Rate | Tax |
|---|---|---|---|
| Personal Allowance | £12,570 | 0% | £0 |
| Basic Rate portion | £37,700 | 20% | £7,540 |
| Higher Rate portion | £14,730 | 40% | £5,892 |
| Total income tax | £13,432 |
On a £65,000 salary, you pay £13,432 in income tax — an effective rate of 20.7%, not 40%.
National Insurance 2025/26
National Insurance (NI) is a separate tax on earnings, often misunderstood as part of income tax. For 2025/26, employees pay:
- 8% on earnings between £12,570 and £50,270 per year
- 2% on earnings above £50,270 per year
Continuing the £65,000 example:
| Portion | Amount | Rate | NI |
|---|---|---|---|
| Between £12,570 and £50,270 | £37,700 | 8% | £3,016 |
| Above £50,270 | £14,730 | 2% | £295 |
| Total NI | £3,311 |
So on a £65,000 salary, total deductions are £13,432 (income tax) + £3,311 (NI) = £16,743 — leaving a take-home pay of £48,257 per year or approximately £4,021 per month.
🏛Key Thresholds to Know
Several important thresholds affect how much tax you pay:
£12,570 — Personal Allowance. Income below this is tax-free.
£50,270 — Higher Rate threshold. Income above this is taxed at 40% (and NI drops to 2%).
£100,000 — Personal Allowance taper begins. Earn £1 more and you start losing your personal allowance.
£125,140 — Personal Allowance fully withdrawn. All income now taxable. Also the Additional Rate threshold — earnings above this taxed at 45%.
Tax Codes — What They Mean
Your tax code tells your employer how much tax-free income you are entitled to. The most common codes are:
1257L — The standard code for most employees with one job, reflecting the £12,570 personal allowance.
BR — Basic Rate. All income from this job is taxed at 20%. Usually means you have another job where your personal allowance is already used.
D0 — All income taxed at 40%. Applied when HMRC believes you will exceed the higher rate threshold.
K codes — Negative allowance. Used when you have untaxed income or benefits that exceed your personal allowance.
If your tax code looks wrong, contact HMRC or check your Personal Tax Account at gov.uk.
Self-Employed and Self-Assessment
If you are self-employed, you pay income tax through Self Assessment rather than PAYE. The rates are the same, but instead of your employer deducting tax monthly, you file a tax return each year and pay the total due.
Self-employed individuals also pay National Insurance, but through a different route:
- Class 2 NI — currently rolled into Self Assessment. Flat rate of £3.45 per week if profits exceed £12,570.
- Class 4 NI — 9% on profits between £12,570 and £50,270, and 2% above £50,270. (Note: these are slightly different from employee rates.)
The Self Assessment deadline for online filing is 31 January following the end of the tax year. Miss it and you face automatic penalties starting at £100.
If you're new to self-employment, see our guide on how to set your freelance rates to make sure your pricing accounts for income tax, National Insurance, and non-billable time.
👤How to Reduce Your Tax Bill Legally
Several legitimate strategies can reduce the income tax you pay:
Pension contributions. Contributing to a pension reduces your taxable income. If you earn £60,000 and contribute £10,000 to a pension, you are only taxed on £50,000 — keeping you below the higher rate threshold. Higher rate taxpayers get 40% tax relief on pension contributions.
Marriage allowance. If one partner earns below the personal allowance and the other is a basic rate taxpayer, you can transfer £1,260 of personal allowance — saving up to £252 per year in tax.
Gift Aid donations. Charitable donations made under Gift Aid allow the charity to reclaim basic rate tax, and higher rate taxpayers can claim the additional 20% relief through Self Assessment.
Salary sacrifice. Asking your employer to reduce your salary in exchange for benefits (childcare vouchers, cycle to work, additional pension contributions) reduces your taxable income and NI liability — see our salary sacrifice guide for worked examples.
Working from home allowance. If you work from home, you can claim £6 per week (£312 per year) without receipts, or a proportion of actual household costs.
Blind Person's Allowance. If you or your partner are registered as a blind person (severely sight impaired), you can claim an additional tax-free allowance of £3,070 for 2025/26 — on top of the standard personal allowance. This gives a blind person a total tax-free income of £15,640 per year. Any unused allowance can also be transferred to a sighted spouse or civil partner.
UK Tax Rates 25/26 at Common Salary Levels
To make the banded system concrete, here is what employees in England pay at common salary points for the 25/26 tax year:
| Gross Salary | Income Tax | National Insurance | Take-Home Pay |
|---|---|---|---|
| £20,000 | £1,486 | £598 | £17,916 |
| £30,000 | £3,486 | £1,398 | £25,116 |
| £40,000 | £5,486 | £2,198 | £32,316 |
| £50,000 | £7,486 | £2,998 | £39,516 |
| £60,000 | £11,432 | £3,198 | £45,370 |
| £80,000 | £19,432 | £3,598 | £56,970 |
| £100,000 | £27,432 | £3,998 | £68,570 |
These figures are approximate and assume the standard 1257L tax code with no other deductions. Use the calculator below for your exact figure.
🏛Scotland: Different Tax Rates Apply
If you live in Scotland, your income tax is set by the Scottish Parliament — not Westminster. Scottish taxpayers pay different rates and thresholds to the rest of the UK, though National Insurance contributions are the same.
| Scottish Band | Income Range | Tax Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Starter Rate | £12,571 to £15,397 | 19% |
| Basic Rate | £15,398 to £27,491 | 20% |
| Intermediate Rate | £27,492 to £43,662 | 21% |
| Higher Rate | £43,663 to £75,000 | 42% |
| Advanced Rate | £75,001 to £125,140 | 45% |
| Top Rate | Over £125,140 | 48% |
Scottish taxpayers earning above £27,491 pay more income tax than equivalent earners in England, Wales, and Northern Ireland — though they benefit from free prescriptions and other devolved policy differences.
PAYE Tax Explained
PAYE (Pay As You Earn) is the system most UK employees use to pay income tax and National Insurance contributions. Under PAYE, your employer deducts tax directly from your salary each pay period and sends it to HMRC on your behalf — you never receive the gross amount.
Your tax code (typically 1257L for most employees) tells your employer how much of your income is tax-free each month. If your code is correct, you should pay exactly the right amount of tax throughout the year without needing to file a Self Assessment return.
When PAYE goes wrong:
- Changing jobs mid-year can result in being put on an emergency tax code (1257L W1/M1), meaning you only get a monthly allowance rather than the full annual one
- Multiple jobs mean your allowance can only apply to one employer — the others must tax you at basic rate or above
- Benefits in kind (company car, private medical) are added to your taxable income via your tax code, reducing your effective tax-free allowance
Always check your tax code at your Personal Tax Account on gov.uk if you suspect you are paying too much or too little tax.
National Insurance Contributions in Detail
National Insurance contributions (NICs) fund the State Pension and certain benefits including Statutory Sick Pay and Maternity Pay. For 2025/26:
Employee NICs (Class 1):
- 0% on earnings up to £12,570
- 8% on earnings between £12,570 and £50,270
- 2% on earnings above £50,270
Employer NICs:
- 15% on earnings above the secondary threshold (£5,000 from April 2025)
- This is paid by your employer on top of your salary — you do not see it on your payslip, but it represents a significant employment cost
Self-employed NICs:
- Class 4: 9% on profits between £12,570 and £50,270, 2% above
- Class 2: Voluntary flat rate, giving you qualifying years for the State Pension
Each qualifying year of National Insurance contributions counts toward your State Pension. You need 35 qualifying years for the full new State Pension (currently £221.20 per week). You can check your NI record and forecast at gov.uk.
What Changed from 2024/25 to 2025/26
The main income tax thresholds and UK tax rates for 25/26 were largely unchanged from 2024/25 — the government continued its threshold freeze policy, which began in 2022. This freeze means:
- The personal allowance remains at £12,570 (frozen since 2021/22)
- The higher rate threshold remains at £50,270 (frozen until at least 2027/28)
- As wages rise with inflation, more people are pulled into higher tax bands — a process known as fiscal drag
The significant change in 2025/26 was employer National Insurance: the rate increased from 13.8% to 15%, and the secondary threshold dropped from £9,100 to £5,000. This increased employment costs for businesses but did not directly change employee take-home pay.
The freeze continues into the 2026/27 tax year (6 April 2026 to 5 April 2027). The personal allowance stays at £12,570 and the higher rate threshold at £50,270, so the UK tax brackets above still apply — fiscal drag simply keeps pulling more earners into the higher bands as wages rise.
Capital Gains Tax — Annual Exempt Amount
While not income tax, Capital Gains Tax (CGT) is often confused with it. CGT applies to profits from selling assets such as property (other than your main home), shares, and business assets. For 2025/26, the annual exempt amount is £3,000 — meaning the first £3,000 of capital gains each year is tax-free.
Above the annual exempt amount, CGT rates are:
- 18% (basic rate taxpayers) or 24% (higher/additional rate taxpayers) on residential property
- 10% (basic rate taxpayers) or 20% (higher/additional rate taxpayers) on other assets
Useful HMRC Resources
- Personal Tax Account: gov.uk/personal-tax-account — check your tax code, NI record, and tax estimate
- Self Assessment: gov.uk/self-assessment-tax-returns
- PAYE queries: 0300 200 3300
- Scottish income tax: mygov.scot/income-tax
Director of a limited company? If you pay yourself through salary and dividends, use our dividend tax calculator to see your total tax bill.
💰Last updated July 2026 based on 2025/26 tax year rates, which remain in place for the 2026/27 tax year under the threshold freeze. Tax rules change regularly — for personalised advice, consult a qualified UK tax adviser or accountant.