UK Income Tax Bands 2026/27 — Tax Brackets, Thresholds & Personal Allowance

UK tax brackets — officially called income tax bands — decide how much tax you pay on each slice of your income. This guide covers the 2026/27 tax year, which runs from 6 April 2026 to 5 April 2027. The bands themselves have not moved: the personal allowance and higher rate threshold have been frozen since 2021, and the November 2025 Budget extended that freeze until April 2031. Whether you are employed, self-employed or running a business, here is exactly how your income tax is calculated, with worked examples.

UK Tax Brackets 2026/27 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.

The Personal Allowance — What It Means

The personal allowance is the amount you can earn each year completely free of income tax. For 2026/27 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

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 (2026/27)

On a £65,000 salary, you pay £13,432 in income tax — an effective rate of 20.7%, not 40%.

National Insurance 2026/27

National Insurance (NI) is a separate tax on earnings, often misunderstood as part of income tax. For 2026/27, 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:

So on a £65,000 salary, total deductions are £13,432 (income tax) + £3,311 (NI) = £16,743 — leaving 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. It is also where employee National Insurance starts.

£50,270 — Higher rate threshold. Income above this is taxed at 40%, and employee NI drops to 2%.

£60,000 — The High Income Child Benefit Charge starts, clawing back Child Benefit until it is fully repaid at £80,000.

£100,000 — Personal Allowance taper begins. Earn £1 more and you start losing your personal allowance.

£125,140 — Personal Allowance fully withdrawn and the additional rate threshold. Earnings above this are 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. See our full guide to the 1257L tax code.

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 your income from other jobs already uses the basic rate band.

K codes — Negative allowance. Used when you have untaxed income or benefits that exceed your personal allowance.

If your tax code looks wrong, check your Personal Tax Account at gov.uk. Our UK tax codes guide explains every code in detail.

Self-Employed and Self Assessment

If you are self-employed, you pay income tax through Self Assessment rather than PAYE. The income tax bands are the same, but instead of your employer deducting tax each month, you file a tax return and pay what you owe.

Self-employed people also pay National Insurance, but through a different route:

• Class 4 NI — 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270.
• Class 2 NI — no longer compulsory since April 2024. Profits above the small profits threshold give you a State Pension qualifying year automatically; if your profits are lower, you can choose to pay voluntary Class 2 contributions (£3.65 a week in 2026/27) to protect your record.

The Self Assessment deadline for online filing and payment is 31 January following the end of the tax year. Miss it and you face an automatic £100 penalty.

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 through salary sacrifice, you are only taxed on £50,000 — keeping all of your income 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, and you can backdate a claim for up to four years.

Gift Aid donations. Charitable donations made under Gift Aid let the charity reclaim basic rate tax, and higher rate taxpayers can claim the extra relief through Self Assessment.

Salary sacrifice. Asking your employer to reduce your salary in exchange for benefits (pension contributions, cycle to work, an electric car) reduces your taxable income and NI — see our salary sacrifice guide for worked examples.

Working from home costs. The £6-a-week flat-rate claim for employees was abolished from 6 April 2026, but employers can still pay you up to £6 a week tax-free for home working, and earlier years can still be backdated — see our working from home tax relief guide.

Blind Person's Allowance. If you are registered as severely sight impaired (or meet the equivalent test in Scotland or Northern Ireland), you can claim an extra tax-free allowance of £3,250 for 2026/27 on top of the standard personal allowance — a total of £15,820. Any unused allowance can be transferred to a spouse or civil partner.

UK Tax at Common Salary Levels (2026/27)

To make the banded system concrete, here is what employees in England, Wales and Northern Ireland pay at common salary points in the 2026/27 tax year:

These figures assume the standard 1257L tax code with no pension contributions, student loan or other deductions. Use the calculator below for your exact figure.

If you are expecting a pay rise, use the pay rise calculator to see how much of your raise you actually keep after tax — particularly important if it pushes you across the £50,270 higher rate threshold.

Scotland: Different Tax Rates Apply

If you live in Scotland, income tax on your earnings, pension and rental income is set by the Scottish Parliament. Scottish taxpayers pay different rates and thresholds to the rest of the UK, though National Insurance, savings and dividend tax are the same.

Scottish taxpayers earning less than about £33,500 pay slightly less income tax than the rest of the UK; above that point they pay more. Our Scottish income tax guide shows the exact difference at every salary.

PAYE Tax Explained

PAYE (Pay As You Earn) is the system most UK employees use to pay income tax and National Insurance. 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) 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 through the year without needing to file a Self Assessment return.

When PAYE goes wrong:

• Changing jobs mid-year can put you 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 insurance) are collected through your tax code, reducing your effective tax-free allowance

Always check your tax code in your Personal Tax Account on gov.uk if you think you are paying too much or too little tax — and see how to claim tax back if you have overpaid.

National Insurance Contributions in Detail

National Insurance contributions build your entitlement to the State Pension and certain benefits. For 2026/27:

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 £5,000 secondary threshold
• This is paid by your employer on top of your salary — you don't see it on your payslip, but it is a significant employment cost

Self-employed NICs:

• Class 4: 6% on profits between £12,570 and £50,270, 2% above
• Class 2: voluntary, for people with low profits who want to protect their State Pension record

Each qualifying year of National Insurance counts towards your State Pension. You need 35 qualifying years for the full new State Pension, which is £241.30 per week in 2026/27. You can check your NI record and forecast at gov.uk. For the full breakdown, see our National Insurance rates guide.

What Changed from 2025/26 to 2026/27

The income tax bands themselves did not change — the freeze that began in 2021 continues, and the November 2025 Budget extended it until April 2031. That means:

• The personal allowance stays at £12,570
• The higher rate threshold stays at £50,270
• As wages rise, more people are pulled into higher tax bands — a process known as fiscal drag

The changes that did take effect from 6 April 2026:

• Dividend tax rose by 2 percentage points at basic and higher rate, to 10.75% and 35.75% (the additional rate stays at 39.35%). See our dividend tax guide.
• The employee working-from-home flat rate was abolished for new claims.
• The National Living Wage rose to £12.71 an hour for workers aged 21 and over.
• Blind Person's Allowance rose to £3,250.

The same Budget also announced 2-percentage-point increases to the income tax rates on savings and property income from April 2027.

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 shares, second homes and business assets. For 2026/27, the annual exempt amount is £3,000 — the first £3,000 of gains each year is tax-free.

Above the annual exempt amount, CGT is charged at 18% for gains that fall within your basic rate band and 24% above it. Since 30 October 2024 these rates apply to all assets, including residential property and shares. See our capital gains tax guide for worked examples.

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 September 2026. Figures based on 2026/27 HMRC rates and thresholds. Tax rules change regularly — for personalised advice, consult a qualified UK tax adviser or accountant.