UK Tax Guide 2026/27

You pay 0% on the first £12,570, then 20% up to £50,270, 40% up to £125,140, and 45% above that.

Income Tax is the main tax on employment income in the United Kingdom. It's collected through the Pay As You Earn (PAYE) system. Your employer deducts it from your salary each pay period before you receive your wages.

Everyone gets a tax-free Personal Allowance of £12,570 for the 2026/27 tax year. You only pay Income Tax on earnings above this threshold. The allowance is reduced by £1 for every £2 earned over £100,000, reaching zero at £125,140.

England, Wales & Northern Ireland Tax Bands (2026/27)

Source: GOV.UK: Income Tax rates

Scotland has six bands from 19% to 48% instead of three. Below roughly £30,000 you pay slightly less than in the rest of the UK, above it you pay more.

Scotland sets its own Income Tax rates and bands. Scottish taxpayers have a tax code beginning with 'S' (e.g. S1257L). National Insurance rates are the same across the whole UK.

Scottish Tax Bands (2026/27)

Want these applied for you? Use the Scotland salary calculator. It defaults to Scottish rates.

Source: GOV.UK: Scottish Income Tax

Between £100,000 and £125,140 you keep only about £380 of every extra £1,000, so pension contributions are the escape.

One of the most misunderstood features of UK tax is the Personal Allowance taper. For every £2 you earn over £100,000, you lose £1 of your £12,570 Personal Allowance. This creates an effective marginal rate of approximately 60% between £100,000 and £125,140 (62% once National Insurance is included).

For example, a £1,000 pay rise at £110,000 gross costs you around £600 in additional tax and lost allowance, so you keep only ~£400.

See it for your own salary on the interactive £100,000 tax trap page, with a marginal-rate chart and a pension-escape tool.

Employees pay 8% NI on earnings between £12,570 and £50,270, then 2% with no upper limit.

National Insurance contributions (NICs) fund the State Pension, NHS, and other benefits. Employees pay Class 1 NICs through PAYE. You stop paying employee NI when you reach State Pension age.

Employee NI Rates (2026/27)

Source: GOV.UK: National Insurance rates

You repay 9% of pay above your plan's threshold (6% for postgraduate loans), and nothing below it.

If you have a student loan, repayments are deducted from your salary through PAYE once you earn above your plan's repayment threshold. The amount repaid is a percentage of income above the threshold, not your total income.

Repayment Thresholds (2026/27)

Source: GOV.UK: Student loan repayments

Pension contributions get tax relief at your marginal rate, and salary sacrifice saves National Insurance on top.

Workplace pension contributions reduce your tax bill, but the amount of relief depends on the scheme type. Under auto-enrolment, the minimum total contribution is 8% of qualifying earnings (5% employee, 3% employer).

Pension Scheme Types

Annual Allowance (2026/27)

You can contribute up to £60,000 per year to pensions with tax relief (or 100% of your earnings, whichever is lower). This is the Annual Allowance. For high earners (adjusted income over £260,000), the allowance tapers down to a minimum of £10,000.

Source: GOV.UK: Pension tax relief

Your tax code (usually 1257L) sets your tax-free pay, so a wrong code means paying the wrong tax every month.

Your tax code tells your employer how much tax-free income you're entitled to. The most common code is 1257L, giving the standard Personal Allowance of £12,570. Find yours on your payslip, P45, P60, or HMRC online account.

Common Tax Codes

Enter your tax code in the calculator's advanced settings for a personalised breakdown. GOV.UK: Tax codes

Transfer £1,260 of allowance from the lower-earning partner and save up to £252 a year.

If you're married or in a civil partnership and one partner earns less than the Personal Allowance (£12,570), they can transfer up to £1,260 to the higher earner. The receiving partner must be a basic rate taxpayer (not higher or additional rate).

This saves up to £252 per year, which is £1,260 × 20%. The transferring partner gets code 1131N and the receiving partner gets 1383M, reflecting adjusted allowances.

Source: GOV.UK: Marriage Allowance

Employers pay 15% NI on nearly your whole salary. It never appears on your payslip, but it shapes what they can afford to offer.

Employers pay a separate National Insurance contribution on top of employee NI. This is not deducted from your salary, but represents the true cost of employing you.

Employer NI Rates (2026/27)

There is no upper earnings limit for employer NI. It applies to all earnings above the threshold. For a £50,000 salary, the employer pays approximately £6,750 in NI on top of the gross salary.

Source: GOV.UK: National Insurance rates