UK Income Tax Bands and Rates 2026/27

UK income tax bands (tax brackets) 2026/27

For 2026/27, the income tax bands in England, Wales and Northern Ireland are: 0% on income up to £12,570 (the Personal Allowance), 20% from £12,571 to £50,270, 40% from £50,271 to £125,140, and 45% above £125,140. Nothing changed from 2025/26. Every rate and threshold is the same.

These are gross salary figures, so you can read them straight off an annual salary or a job advert. HMRC also publishes the same bands after the Personal Allowance has been taken off. That is where the £37,700 basic rate band comes from (£50,270 minus £12,570). The £37,700 band sitting on top of a £12,570 allowance puts the higher rate threshold at £50,270.

The 2026/27 tax year runs from 6 April 2026 to 5 April 2027. Scotland sets its own rates and bands, and they differ from the rest of the UK. If you live there, the Scottish income tax bands further down apply to your wages.

How does income tax work in the UK?

Income tax is charged in bands, not at one flat rate. Each rate applies only to the slice of income inside its band. Crossing into the 40% band does not mean paying 40% on everything you earn. It means paying 40% on the pounds above £50,270, and nothing more.

The first £12,570 of income is tax-free. This is the Personal Allowance.

Example: on a salary of £40,000, you pay 0% on the first £12,570 and 20% on the remaining £27,430. Your income tax bill is roughly £5,486 a year (£457 a month). It is not 20% of the full £40,000.

This is also why a pay rise can never leave you worse off overall. Only the extra pounds are taxed at the new rate. So a raise that tips you over a threshold still increases your take-home pay.

Income tax is not the only deduction on your payslip. National Insurance is a separate charge on top, at 8% of earnings between £12,570 and £50,270 and 2% above that. This is why take-home pay is lower than the income tax bands alone suggest. National Insurance has its own thresholds and rates. They do not always move in step with income tax.

Scottish income tax bands 2026/27

Scotland has six income tax bands rather than four. For 2026/27 they are 19% from £12,571 to £16,537, 20% from £16,538 to £29,526, 21% from £29,527 to £43,662, 42% from £43,663 to £75,000, 45% from £75,001 to £125,140, and 48% above £125,140. The £12,570 Personal Allowance is the same across the whole UK.

None of the Scottish rates changed for 2026/27, but two thresholds moved up. The starter band top went from £15,397 to £16,537, and the basic band top went from £27,491 to £29,526. The higher, advanced and top thresholds stayed exactly where they were.

Scottish rates and bands apply to earnings, self-employment profits, pensions and rental income. Savings interest and dividends are taxed at UK-wide rates wherever you live in the UK. Capital gains are also UK-wide, but they are a separate tax. See how Capital Gains Tax works if you have sold shares or a second property. Which set of bands you fall under is decided by where your main home is, not where your employer is based.

What is the Personal Allowance and what is the £100k trap?

The Personal Allowance is £12,570, the amount of income you can earn before paying any income tax. Above £100,000, it is withdrawn at £1 for every £2 you earn. This is sometimes called the ‘£100k trap’.

By the time you earn £125,140, the Personal Allowance is gone entirely. That creates an effective marginal tax rate of 60% on income between £100,000 and £125,140. It is one of the strangest quirks of the UK tax system.

HMRC defines ‘adjusted net income’ as the figure used to work out the Personal Allowance reduction above £100,000. It is total taxable income after certain deductions. The main two are pension contributions and Gift Aid donations. This is why the taper starts at different points for two people on the same headline salary. The £100,000 threshold and the £1-for-£2 withdrawal work the same way in Scotland as in the rest of the UK.

HMRC publishes full guidance on how adjusted net income is calculated, and on the £100,000 threshold, at gov.uk/income-tax-rates. This is a general explanation of HMRC rules. It is not tax or financial advice. Speak to a qualified adviser before you make any decisions about your own tax position.

How PAYE and tax codes work

If you’re employed, your employer deducts income tax from your wages with each payslip, through PAYE (Pay As You Earn). Your employer gets your tax code from HMRC. The code tells them how much to deduct.

The standard tax code is 1257L. The ‘L’ means you get the standard Personal Allowance. The 1257 is £12,570 with the final zero dropped. Other letters mean different things. ‘M’ and ‘N’ relate to Marriage Allowance. ‘K’ means your untaxed income exceeds your allowances. ‘BR’ means everything is taxed at basic rate, often a second job.

PAYE spreads the bands across the year rather than applying them in one lump. On code 1257L, your employer gives you roughly £1,048 of tax-free pay a month, or £242 a week. They tax the rest according to where it falls in the bands. A big one-off month, such as a bonus or lots of overtime, can look like it was taxed at a punishing rate. That is because PAYE briefly treats that month as your normal earnings. It usually evens out over the following payslips.

Tax codes also carry a country prefix. Codes for Scottish taxpayers start with an S, and codes for Welsh taxpayers start with a C. This is how your employer knows which set of bands to apply.

Check your payslip. If your tax code looks wrong, contact HMRC or check the HMRC app. A wrong tax code means you may be paying too much or too little tax. It is worth knowing that 1257L is also the standard emergency code. Seeing it on a first payslip in a new job is normal, not a mistake.

What counts as income for tax purposes?

Income tax applies to employment income (salary, bonuses, benefits in kind), self-employment profits, rental income, savings interest above the Personal Savings Allowance, dividends above the Dividend Allowance (£500 in 2026/27), and pension income once it is drawn. Income inside an ISA or pension is largely protected.

It applies to more than just your salary. The main sources are:

• Employment income, salary, bonuses, benefits in kind
• Self-employment profits
• Rental income from property
• Savings interest above the Personal Savings Allowance
• Dividends above the Dividend Allowance (£500 in 2026/27)
• Pension income (once you start drawing it)

Pension income counts once you start drawing it. That includes the State Pension, which is taxable even though it is not paid through an employer’s payroll.

Income inside an ISA or pension is largely protected from income tax. Interest on cash in an ISA is not taxed. Neither are income and gains from investments held in one. You do not have to declare any of it on a tax return. A stocks and shares ISA gives investment income the same shelter.

How does HMRC calculate your taxable income?

Under HMRC rules, several things reduce the income figure used to calculate income tax:

• Pension contributions: contributions to a registered pension scheme reduce your taxable income. Relief is given at your marginal rate.
• Marriage Allowance: a government scheme that lets one spouse or civil partner transfer £1,260 of their unused Personal Allowance to the other, where the recipient is a basic-rate taxpayer. Eligibility rules and how to apply are on gov.uk/marriage-allowance.
• Gift Aid: Gift Aid donations extend the basic-rate tax band. This moves the boundary at which higher-rate tax applies. Guidance is on gov.uk.
• Salary sacrifice: HMRC allows certain benefits provided through salary sacrifice to reduce the taxable pay figure. Examples include pension contributions and cycle-to-work schemes. Your employer decides which schemes are offered. HMRC publishes guidance on qualifying arrangements at gov.uk.