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Tax year 2026/27 Last reviewed: 17 October 2026
UK income tax 2026/27: rates, bands and allowances
For 2026/27, the UK Personal Allowance is £12,570. In England, Wales and Northern Ireland you then pay 20% on income up to £50,270, 40% up to £125,140 and 45% above that. Scotland has six bands, from 19% to 48%. These figures come from GOV.UK for the tax year 6 April 2026 to 5 April 2027.
Income tax applies to wages, self-employed profit, pensions, rental profit, savings interest and dividends. Most employees only need the bands table and the £65,000 example. If your income is close to £100,000, start with the 60% trap.
Key takeaways
- The Personal Allowance is £12,570 in 2026/27. Finance Act 2021 section 5, as amended by Finance Act 2026, fixes it and the £37,700 basic-rate limit for every tax year from 2022/23 to 2030/31.
- In England, Wales and Northern Ireland the rates are 20%, 40% and 45%. Scotland has six rates from 19% to 48%.
- On a £65,000 salary the income tax bill is £13,432, an average rate of 20.7%.
- Between £100,000 and £125,140 your allowance shrinks by £1 for every £2 earned, so each extra £100 costs £60 in income tax.
- A £20,000 pension contribution by salary sacrifice, taken from a £120,000 salary, cuts income tax by £12,000.
- Dividends are taxed at 10.75%, 35.75% and 39.35% above a £500 allowance.
- Making Tax Digital for Income Tax started on 6 April 2026 for sole traders and landlords with qualifying income over £50,000.
- From 6 April 2027, property and savings income will be taxed at 22%, 42% and 47% (property rates in England, Wales and Northern Ireland only).
What are the income tax rates and bands for 2026/27?
For 2026/27, GOV.UK sets the Personal Allowance at £12,570. In England, Wales and Northern Ireland the basic rate of 20% applies to taxable income up to £37,700, which takes you to £50,270 in total income. The higher rate of 40% runs to £125,140. The additional rate is 45%. Welsh rates match English rates this year.
| Band | Total income | 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% |
Source: GOV.UK, Income Tax rates and Personal Allowances. Above £100,000 the Personal Allowance falls by £1 for every £2 of adjusted net income and reaches £0 at £125,140.
How is tax worked out on a £65,000 salary?
Tax is charged slice by slice. Someone on £65,000 does not pay 40% on all of it. They pay nothing on the first £12,570, 20% on the next £37,700 and 40% on the last £14,730.
| Slice | Amount | Rate | Tax |
|---|---|---|---|
| £0 to £12,570 | £12,570 | 0% | £0 |
| £12,571 to £50,270 | £37,700 | 20% | £7,540 |
| £50,271 to £65,000 | £14,730 | 40% | £5,892 |
| Total | £65,000 | £13,432 |
That is an average rate of 20.7%. National Insurance is charged separately.
How do employees and the self-employed pay?
Your employer or pension provider takes income tax from your pay using your tax code. The self-employed and landlords report income on a Self Assessment return. GOV.UK says payments on account are due by midnight on 31 January and 31 July, each worth half of the previous year's bill, with any balance due by 31 January.
How is income tax different in Scotland?
If you live in Scotland, you pay Scottish Income Tax. For 2026/27 GOV.UK lists a starter rate of 19%, a basic rate of 20%, an intermediate rate of 21%, a higher rate of 42%, an advanced rate of 45% and a top rate of 48%. Your tax code starts with S.
| Band | Income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Starter rate | £12,571 to £16,537 | 19% |
| Basic rate | £16,538 to £29,526 | 20% |
| Intermediate rate | £29,527 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% |
Source: GOV.UK, Scottish Income Tax.
How much more tax does a £75,000 earner pay in Scotland?
On a £75,000 salary the income tax bill is £19,482 in Scotland and £17,432 in England, so the Scottish taxpayer pays about £2,050 more. Between £43,663 and £50,270 a Scottish taxpayer pays 42% on each extra pound, where someone in England pays 20%. A pension contribution from that slice saves 42p of income tax per £1, against 20p in England.
| England, Wales and Northern Ireland | Scotland | |
|---|---|---|
| Higher rate starts at | £50,271 | £43,663 |
| Higher rate | 40% | 42% |
| Income tax on £75,000 | £17,432 | £19,482 |
| Difference | About £2,050 more |
Worked out from the GOV.UK 2026/27 bands. National Insurance is not included.
What is fiscal drag, and how long will thresholds stay frozen?
Fiscal drag happens when tax thresholds stay still while pay rises, so more of your income lands in higher bands. Finance Act 2021 section 5, as amended by Finance Act 2026, fixes the £12,570 Personal Allowance and the £37,700 basic-rate limit for every tax year from 2022/23 to 2030/31.
Someone on £48,000 pays no higher-rate tax. After a rise to £55,000, £4,730 sits above the £50,270 threshold and is taxed at 40% instead of 20%. That costs an extra £946 a year.
| Threshold | 2026/27 amount | Fixed until |
|---|---|---|
| Personal Allowance | £12,570 | Tax year 2030/31 |
| Basic-rate limit | £37,700 | Tax year 2030/31 |
| Higher-rate threshold (allowance plus basic-rate limit) | £50,270 | Follows from the two above |
Source: legislation.gov.uk, Finance Act 2026 section 10.
The thresholds are fixed. Pension contributions and Gift Aid donations lower your adjusted net income, which is the figure GOV.UK uses for the Personal Allowance taper.
What is the 60% tax trap?
The 60% tax trap affects income between £100,000 and £125,140. GOV.UK says your Personal Allowance falls by £1 for every £2 of adjusted net income above £100,000. So each extra £100 of income costs £60 in income tax: £40 at the 40% rate and £20 because you lose £50 of allowance.
How much Personal Allowance do you keep?
| Adjusted net income | Personal Allowance left |
|---|---|
| £100,000 | £12,570 |
| £105,000 | £10,070 |
| £110,000 | £7,570 |
| £120,000 | £2,570 |
| £125,140 or more | £0 |
Source: GOV.UK, Income Tax rates.
How does the effective rate reach 71%?
National Insurance and student loan repayments come on top. An employee in the trap zone in England pays 60% income tax, 2% employee National Insurance and 9% on a Plan 2 student loan, which makes 71%. A £1,000 bonus then leaves £290. By the same arithmetic, the Scottish advanced rate of 45% makes the income tax part 67.5% in that zone.
How do you get out of the trap?
Lower your adjusted net income. GOV.UK counts a pension contribution you pay yourself, grossed up by £1.25 for each £1 paid, and Gift Aid donations in the same way. Salary sacrifice cuts your taxable pay directly.
| Before | After | |
|---|---|---|
| Salary | £120,000 | £100,000 |
| Personal Allowance | £2,570 | £12,570 |
| Income tax | £39,432 | £27,432 |
| Tax saved | £12,000 | |
| Employee National Insurance saved (2%) | £400 |
Take-home pay falls by about £7,600, while £20,000 goes into the pension. Your employer also saves £3,000 in employer National Insurance at 15%. The figures ignore student loans and assume all pay is employment income. Check that your employer offers salary sacrifice.
The pension annual allowance is £60,000 for most people, according to GOV.UK, so a £20,000 contribution sits well within it.
How much National Insurance do you pay on top of income tax?
Employees pay Class 1 National Insurance of 8% on earnings between £12,570 and £50,270 a year and 2% above that, according to GOV.UK's 2026/27 employer rates. Employers pay 15% above £5,000. Self-employed people pay Class 4 at 6% on profits from £12,570 to £50,270 and 2% above.
| Who pays | Class | Rate | Threshold |
|---|---|---|---|
| Employees | Class 1 | 8% | Earnings from £12,570 to £50,270 |
| Employees | Class 1 | 2% | Earnings over £50,270 |
| Employers | Class 1 | 15% | Earnings over £5,000 |
| Self-employed | Class 4 | 6% | Profits from £12,570 to £50,270 |
| Self-employed | Class 4 | 2% | Profits over £50,270 |
Sources: GOV.UK, rates and thresholds for employers 2026 to 2027 and GOV.UK, self-employed National Insurance rates.
A salary of £55,000 means 8% on £37,700 (£3,016) plus 2% on £4,730 (£95). That is about £3,111 a year.
Class 2 is no longer a compulsory charge. GOV.UK says it is treated as paid when profits are £7,105 or more. Below that you can choose to pay £3.65 a week.
Most people stop paying Class 1 National Insurance at State Pension age, and the self-employed stop Class 4 from the following 6 April. Eligible employers can claim an Employment Allowance of up to £10,500 off their employer National Insurance. A GOV.UK technical note says people with property, savings or dividend income do not pay National Insurance on it. Landlords can still pay voluntary contributions.
How are dividends, savings interest and rental income taxed?
These incomes sit on top of your wages and pension. Dividends above the £500 allowance are taxed at 10.75%, 35.75% or 39.35%. Savings interest can be tax-free under the starting rate for savings or the Personal Savings Allowance of £1,000 or £500. Rental profit is taxed at your normal income tax rates.
Dividend tax rates for 2026/27
| Your tax band | Rate on dividends above the allowance |
|---|---|
| Dividend allowance | 0% on the first £500 |
| Basic rate | 10.75% |
| Higher rate | 35.75% |
| Additional rate | 39.35% |
Source: GOV.UK, tax on dividends. The allowance was £1,000 in 2023/24 and has been £500 since 2024/25.
A higher-rate taxpayer who takes £30,000 in dividends pays 35.75% on £29,500, which is about £10,546 in dividend tax. GOV.UK says you can save tax-free with ISAs, so holding dividend-paying shares in a Stocks and Shares ISA is one way to avoid this tax.
Savings interest and the Personal Savings Allowance
| Taxpayer | Tax-free savings interest |
|---|---|
| Basic rate | £1,000 Personal Savings Allowance |
| Higher rate | £500 Personal Savings Allowance |
| Additional rate | £0 |
| Other income under £17,570 | Up to £5,000 at the 0% starting rate for savings |
Source: GOV.UK, how much savings interest is tax-free. The starting rate falls by £1 for every £1 of other income above the Personal Allowance.
As an illustration, £30,000 earning 4.4% pays £1,320 of interest. A higher-rate taxpayer has a £500 allowance, so tax is 40% of £820, or £328. The same savings in a Cash ISA are tax-free.
Rental income
Rental profit is added to your other income and taxed at the same rates. You can claim the £1,000 property allowance or deduct your actual costs, but not both. Residential landlords cannot deduct mortgage interest. They get a tax reduction worth 20% of their finance costs instead. See our property and landlord tax guide for the rules in full.
How can you legally pay less income tax?
The main routes are pension contributions, Gift Aid, the Marriage Allowance and tax-free ISAs. Pension contributions and Gift Aid reduce your adjusted net income, which can restore Personal Allowance above £100,000. The Marriage Allowance transfers £1,260 of allowance and cuts your partner's tax by up to £252 a year.
Pension contributions
Pension contributions can pull adjusted net income back towards £100,000, and the salary sacrifice example shows a £20,000 contribution saving £12,000 in income tax. Salary sacrifice also saves National Insurance. Our planning and strategies guide covers the options in more detail.
Marriage Allowance
You can transfer £1,260 of your Personal Allowance to your spouse or civil partner if your income is below £12,570 and they pay basic-rate tax. In England, Wales and Northern Ireland that means income of £12,571 to £50,270. In Scotland it means the starter, basic or intermediate rate, usually £12,571 to £43,662. GOV.UK says the claim reduces their tax by up to £252 in the tax year and can be backdated to 6 April 2022. Apply on GOV.UK or read our family and marriage tax guide.
ISAs and Bed and ISA
According to GOV.UK you can save tax-free with ISAs, up to £20,000 in 2026/27. A Bed and ISA moves investments you hold outside an ISA into one: you sell them, then buy them back inside the ISA. Gains above the £3,000 annual exempt amount are taxable on the sale, at 18% or 24%. See our guides to Stocks and Shares ISAs, Cash ISAs and Capital Gains Tax.
Does Making Tax Digital for Income Tax apply to you?
Making Tax Digital for Income Tax applies to sole traders and landlords whose qualifying income was over £50,000 on their 2024/25 tax return. It started on 6 April 2026. You keep digital records, send quarterly updates through compatible software and submit your tax return. For 2026/27 the tax return and payment deadline is 31 January 2028.
| Qualifying income | Based on tax return | Starts |
|---|---|---|
| Over £50,000 | 2024/25 | 6 April 2026 |
| Over £30,000 | 2025/26 | 6 April 2027 |
| Over £20,000 | 2026/27 | 6 April 2028 |
Qualifying income is your total turnover from self-employment and property before expenses. Source: GOV.UK, use Making Tax Digital for Income Tax.
| Update | Deadline |
|---|---|
| First quarterly update | 7 August 2026 |
| Second quarterly update | 7 November 2026 |
| Third quarterly update | 7 February 2027 |
| Fourth quarterly update | 7 May 2027 |
| Tax return and payment | 31 January 2028 |
GOV.UK says late quarterly updates earn penalty points rather than an immediate penalty, and no points apply to late quarterly updates for 2026/27. See our HMRC rules and compliance guide.
What changes from 6 April 2027?
From 6 April 2027, property income will be taxed at 22%, 42% and 47% in England, Wales and Northern Ireland, and savings income at 22%, 42% and 47% across the UK. The Personal Allowance stays at £12,570. The cash ISA limit for people aged 64 or under falls to £12,000, and Making Tax Digital reaches income over £30,000.
These are confirmed future changes. None applies in 2026/27.
| Area | 2026/27 (now) | From 6 April 2027 | Applies to |
|---|---|---|---|
| Property income rates | 20%, 40%, 45% | 22%, 42%, 47% | England, Wales and Northern Ireland |
| Tax reduction for residential finance costs | 20% | 22% | England, Wales and Northern Ireland |
| Savings income rates | 20%, 40%, 45% | 22%, 42%, 47% | UK |
| Dividend rates | 10.75%, 35.75%, 39.35% | No change | UK |
| Personal Allowance and basic-rate limit | £12,570 and £37,700 | No change | UK |
| Cash ISA limit | £20,000 | £12,000 if aged 64 or under at the end of the tax year; £20,000 for those 65 and over | UK |
| Making Tax Digital threshold | Over £50,000 | Over £30,000 | UK |
Sources: GOV.UK policy paper on property, savings and dividend rates, Finance Act 2026 section 7, Finance Act 2026 section 5 and Individual Savings Account (Amendment) (No. 2) Regulations 2026. The property allowance, Rent a Room scheme, starting rate for savings and Personal Savings Allowance do not change.
The Personal Allowance and other reliefs will be set against income that is not property, savings or dividend income first. The policy paper does not set property rates for Scotland.
Frequently asked questions about income tax
What does tax code 1257L mean?
1257L is the tax code used for most people with one job or pension, according to GOV.UK. The 1257 stands for £12,570 of tax-free Personal Allowance and the L means you get the standard allowance. Check your code on your payslip or in your personal tax account.
What happens if I am on an emergency tax code?
A W1, M1 or X after your code means tax is worked out on one week's or month's pay alone. GOV.UK says this can mean you pay the wrong amount. If you paid too much you can claim a refund. If you paid too little, you stay on the code until you have paid the correct tax.
Do I pay income tax on my State Pension?
Yes, if your total taxable income is above your allowances. GOV.UK counts the State Pension as taxable income. Its 2026/27 rates table gives the full new State Pension as £241.30 a week, or £12,547.60 over 52 weeks, which is £22.40 below the £12,570 Personal Allowance. Other income is taxed on top.
Is rental income taxed the same as a salary?
Rental profit is added to your other income and taxed at the same rates. You can claim the £1,000 property allowance or deduct actual costs, not both. Residential landlords get a 20% tax reduction on mortgage interest instead of a deduction. GOV.UK says National Insurance is not compulsory for landlords.
Why is my second job taxed so heavily?
You get one Personal Allowance a year, and GOV.UK says it is usually applied to the job that pays most. A second job often gets a BR code, which taxes all pay at 20%, or a D0 code, which taxes it at 40%. Contact HMRC to ask whether your allowance can be split between jobs.
How do I avoid the 60% tax trap?
Lower your adjusted net income towards £100,000. A pension contribution, through salary sacrifice or a personal pension, or a Gift Aid donation will do it. Every £2 you remove below £125,140 gives back £1 of Personal Allowance. Cutting £120,000 to £100,000 saves £12,000 in income tax.
Who has to use Making Tax Digital for Income Tax?
Sole traders and landlords with qualifying income over £50,000 on their 2024/25 return must use it from 6 April 2026. The limit falls to £30,000 from 6 April 2027 and £20,000 from 6 April 2028. Qualifying income is turnover before expenses from self-employment and property together.
Can I backdate a Marriage Allowance claim?
Yes. GOV.UK says you can backdate a claim to 6 April 2022, the start of the 2022 to 2023 tax year. The allowance transfers £1,260 and cuts your partner's tax by up to £252 for each year. The lower earner's income must be below the Personal Allowance and the other partner must pay basic-rate tax.
Where can you read more?
UK tax hub
Every UK tax type in one place.
Planning and strategies
Salary sacrifice, pensions and Marriage Allowance explained.
Capital Gains Tax
The £3,000 allowance, rates and Bed and ISA.
HMRC rules and compliance
Making Tax Digital, Self Assessment deadlines and penalties.
Property and landlord tax
Rental income, Section 24 and allowances.
Family and marriage tax
Marriage Allowance and Child Benefit.
Student loans
Plans, thresholds and repayments.
Stocks and shares ISAs
Keep dividends and gains tax-free.
Salary after tax calculator
Work out your take-home pay after income tax and National Insurance.
Calculators and tools
More calculators and tax tools.
Primary sources
- GOV.UK: Income Tax rates and Personal Allowances
- GOV.UK: Scottish Income Tax
- GOV.UK: Rates and thresholds for employers 2026 to 2027
- GOV.UK: Tax on dividends
- GOV.UK: Marriage Allowance
- GOV.UK: Making Tax Digital for Income Tax
- GOV.UK: What your tax code means
- GOV.UK: Self Assessment deadlines
- GOV.UK: Benefit and pension rates 2026 to 2027
- GOV.UK: Changes to tax rates for property, savings and dividend income (technical note)
- legislation.gov.uk: Finance Act 2021 section 5
- legislation.gov.uk: Finance Act 2026 section 10
What should you check this tax year?
Check your tax code, your adjusted net income if you earn near £100,000, any Marriage Allowance claim and whether Making Tax Digital applies to you. If you file Self Assessment, file online and pay what you owe for 2025/26 by 31 January 2027. The 2026/27 tax year ends on 5 April 2027.
If you file a Self Assessment return, the deadline to file online and pay the tax for 2025/26 is 11:59pm on 31 January 2027, according to GOV.UK.
Check your tax code in your personal tax account. An incorrect code means you pay the wrong tax.
If you earn between £100,000 and £125,140, work out your adjusted net income and ask your employer about salary sacrifice.
If one partner earns under £12,570, claim the Marriage Allowance. You can backdate to 6 April 2022.
If you are a sole trader or landlord with qualifying income over £50,000, check that your Making Tax Digital software is set up.
If you hold savings or shares outside an ISA, check whether your £20,000 ISA allowance could shelter the interest or dividends.
TaxYZ provides educational information only and is not regulated by the FCA or ICAEW. All rates, bands and thresholds reflect the 2026/27 tax year as published by GOV.UK and HMRC. This page does not constitute tax advice. Please consult a qualified tax adviser or accountant before making financial decisions based on this content.