UK income tax for the 2026/27 tax year uses a personal allowance of £12,570, a basic rate of 20% on the next £37,700, a higher rate of 40% on income up to £125,140 and an additional rate of 45% above that. Scotland operates a separate set of bands with rates ranging from 19% to 48%. The personal allowance tapers away by £1 for every £2 of income above £100,000, so it is fully gone at £125,140 , creating the so-called £100,000 trap, where every £1 of income in the band is effectively taxed at 60%. This calculator runs the bands correctly for England, Wales, Northern Ireland and Scotland and shows you the exact income tax on a given salary or total income.
How the income tax bands work
The personal allowance is the amount of income you can receive each tax year before any income tax is due. For 2026/27 it is £12,570 for almost everyone. Above that, the rest of your income is taxed in tiers:
| Band (England, Wales, NI) | Income range | Rate |
|---|---|---|
| Personal allowance | £0 - £12,570 | 0% |
| Basic rate | £12,571 - £50,270 | 20% |
| Higher rate | £50,271 - £125,140 | 40% |
| Additional rate | £125,141+ | 45% |
For Scotland, the bands look different:
| Band (Scotland) | Income range | Rate |
|---|---|---|
| Personal allowance | £0 - £12,570 | 0% |
| Starter rate | £12,571 - £16,537 | 19% |
| Basic rate | £16,538 - £29,526 | 20% |
| Intermediate rate | £29,527 - £43,662 | 21% |
| Higher rate | £43,663 - £75,000 | 42% |
| Advanced rate | £75,001 - £125,140 | 45% |
| Top rate | £125,141+ | 48% |
Scottish income tax applies to non-savings, non-dividend income for taxpayers whose main home is in Scotland. Savings interest and dividend income are taxed at UK-wide rates regardless of where you live.
The £100,000 trap
Once your adjusted net income exceeds £100,000, you lose £1 of personal allowance for every £2 of income above the threshold. The personal allowance is fully gone at £125,140. Inside this band, you pay 40% income tax on the income itself plus 40% on the personal allowance you have lost (because you can no longer use it). The arithmetic gives a 60% effective rate on every £1 earned between £100,000 and £125,140. In Scotland the equivalent trap is even sharper because the marginal rate above £100,000 is 42% rather than 40%, producing a 63% effective rate.
The standard planning response is a salary sacrifice pension contribution that brings adjusted net income back below £100,000. Every £1 sacrificed inside the trap effectively costs you 40p of net income but gains £1 of pension; that is a 60% effective rate of relief, which is hard to ignore. The Salary Sacrifice calculator and the Pension Tax Relief calculator both flag this scenario.
How income tax is collected
For employees, income tax is deducted at source through PAYE. Your tax code (typically 1257L for someone with the full personal allowance and no adjustments) tells your employer how much of your pay is tax-free. For the self-employed, income tax is paid through Self Assessment , once a year by 31 January following the tax year, plus payments on account towards the next bill. Most directors are caught by both systems: PAYE on their salary and Self Assessment for any dividends or other income.
Worked example: £75,000 salary in England
Take a £75,000 salary in England in 2026/27.
- First £12,570: personal allowance, no tax.
- Next £37,700: basic-rate band, taxed at 20% = £7,540.
- Final £24,730 (£75,000 − £50,270): higher-rate band, taxed at 40% = £9,892.
Total income tax: £17,432. After income tax, the gross-to-net journey continues with employee NI (£4,492) to give a net of around £53,076 before pension and student loan deductions , see Salary Take-Home for the full picture.
In Scotland, the same £75,000 salary attracts Starter, Basic, Intermediate, Higher and Advanced rate tax across five bands, totalling around £19,800 of income tax. The difference between Scottish and rest-of-UK income tax for higher earners has widened since 2024.
Frozen thresholds and fiscal drag
The personal allowance and basic-rate threshold have been frozen since April 2021 and are now confirmed frozen until April 2031. With wages rising over the same period, the proportion of taxpayers in the higher-rate band has grown sharply. For an individual whose pay rises by 4% a year, every year is also a small increase in effective tax rate as more of their pay drifts into the basic-rate or higher-rate band. The Office for Budget Responsibility forecasts millions of additional higher-rate taxpayers by 2029. Tax planning that protects the basic-rate band , pension contributions, salary sacrifice, ISA dividends , is more valuable than ever in this freeze environment.
Key takeaways
- 2026/27 income tax bands: 0% to £12,570, 20% to £50,270, 40% to £125,140, 45% above. Scotland uses six different bands from 19% to 48%.
- The personal allowance tapers by £1 for every £2 of income above £100,000 and is fully gone at £125,140, creating a 60% effective rate in that band (63% in Scotland).
- The personal allowance, basic-rate band and higher-rate threshold are all frozen until April 2031.
- Income tax is paid through PAYE for employees and through Self Assessment for the self-employed and most company directors.
- For high earners, salary sacrifice pension contributions are the most efficient tool for managing the £100,000 trap and the higher-rate band.
Frequently asked questions
Why is my tax code different from 1257L? 1257L is the standard code for someone entitled to the full personal allowance with no adjustments. Codes change because of company benefits (a car, medical insurance, accommodation), an underpayment from a prior year, or an estimate of other income. A K code means HMRC believes your other deductions exceed your allowance and is collecting more tax through PAYE.
Do I get the personal allowance if I earn over £125,140? No. Once your adjusted net income exceeds £125,140, the personal allowance is fully tapered away. You pay tax from £1 of income upwards.
How does income tax work for dividends? Dividends are taxed separately from earned income, at dividend tax rates (10.75%, 35.75%, 39.35%) rather than 20%, 40%, 45%. They sit on top of the income tax stack and the band they fall into depends on your salary and other earnings. See Dividend Tax for the full mechanics.
Are pension contributions tax-deductible? Yes, indirectly. A relief-at-source contribution of £1,000 net costs a basic-rate taxpayer £1,000 net (the pension provider claims £250 from HMRC, so £1,250 ends up in the pot). A higher-rate or additional-rate taxpayer claims further relief through Self Assessment to bring the effective net cost down to £750 or £687.50 per £1,000 contributed. See Pension Tax Relief for how to claim the additional relief.