Key takeaways
- The 45% additional rate applies to taxable income over £125,140 in England, Wales and Northern Ireland; Scotland's top rate is 48%.
- By that point the Personal Allowance has gone completely, so every pound of income is taxable.
- Additional rate taxpayers have no Personal Savings Allowance and pay 39.35% on dividends above £500.
- Pension contributions get relief at 45%, but the annual allowance tapers for adjusted income above £260,000.
- Gift Aid and personal pension contributions raise the point at which 45% starts.
The additional rate threshold was cut from £150,000 to £125,140 in April 2023 and has been frozen since, so the 45% band now starts at the same point at which the Personal Allowance runs out. This guide explains what changes for income above that level and the planning that still works.
Rates above £125,140
| Income type | Additional rate 2026/27 |
|---|---|
| Earnings, pensions, self-employed and property income (England, Wales, NI) | 45% |
| Earnings, pensions and property income (Scotland, top rate) | 48% |
| Savings interest | 45% (47% from April 2027) |
| Dividends above the £500 allowance | 39.35% |
| Capital gains above the £3,000 exempt amount | 24% |
Employee National Insurance stays at 2% on earnings above £50,270, so the combined marginal rate on salary is 47% (50% in Scotland).
What you lose
The Personal Allowance
The Personal Allowance is reduced by £1 for every £2 of adjusted net income over £100,000, so it is nil from £125,140. Additional rate taxpayers pay tax from the first pound of income. The 60% band between £100,000 and £125,140 sits just below the additional rate.
The Personal Savings Allowance
Basic rate taxpayers get £1,000 of tax-free interest and higher rate taxpayers £500. Additional rate taxpayers get nothing, so all interest outside an ISA is taxed at 45%.
Pension allowance, at the very top
The £60,000 annual allowance tapers by £1 for every £2 of adjusted income above £260,000 (if threshold income is above £200,000), down to £10,000 at £360,000. Adjusted income for this test includes employer pension contributions.
How to tell if you are an additional rate taxpayer
You are an additional rate taxpayer if your taxable income, after any adjustments for pension contributions and Gift Aid, is above £125,140. Because relief at source contributions and Gift Aid extend both the basic rate band and the additional rate threshold, a gross personal contribution of £10,000 means the 45% rate starts at £135,140 instead.
You do not automatically have to file a Self Assessment return just because your income is above £125,140 or £150,000. Since the 2023/24 tax year HMRC has not required returns from employees purely because their PAYE income is over £150,000. You still need to file if you have untaxed income, need to pay the High Income Child Benefit Charge through Self Assessment, or want to claim higher rate relief on pension contributions or Gift Aid. See who needs to file.
Planning for additional rate taxpayers
Pension contributions
Relief at 45% makes pension contributions particularly valuable, and contributions that bring income below £125,140 also start to restore the Personal Allowance, worth up to 60% relief in that band. Watch the tapered annual allowance and the 100% of earnings limit. See pension tax relief.
Salary sacrifice and bonus sacrifice
Sacrificing salary or a bonus into a pension saves 45% Income Tax and 2% employee NI, and the employer’s 15% NI saving can be passed on. From April 2029, National Insurance will apply to sacrificed pension contributions above £2,000 a year.
Gift Aid and gifts of shares
A £100 Gift Aid donation costs an additional rate taxpayer £68.75 after relief. Giving listed shares directly to charity gives Income Tax relief on their value and no Capital Gains Tax. See Gift Aid tax relief.
Using your spouse’s allowances
A spouse or civil partner with lower income has their own Personal Allowance, savings and dividend allowances, and lower rate bands. Moving income-producing assets to them, as genuine outright gifts, can save significant tax. Transfers between spouses are free of Capital Gains Tax.
ISAs and tax-efficient investments
With no savings allowance and a 39.35% dividend rate, ISAs are especially valuable. Experienced investors may also consider EIS, SEIS and VCT investments, which give Income Tax relief of 30%, 50% and 20% respectively (VCT relief fell from 30% on 6 April 2026), but carry high risk.
Company directors
Directors can control the mix and timing of salary, dividends and employer pension contributions. Spreading income evenly across tax years, rather than taking a large dividend in one year, can keep more income below £125,140. Our salary vs dividends calculator models the options.
Frequently asked questions
What is the additional rate threshold for 2026/27?
£125,140 of taxable income in England, Wales and Northern Ireland. Scotland’s 48% top rate also starts at £125,140, with a 45% advanced rate from £75,001.
Do additional rate taxpayers get a Personal Allowance?
No. It has been fully withdrawn by the time income reaches £125,140.
What is the dividend tax rate for additional rate taxpayers?
39.35% on dividends above the £500 Dividend Allowance. It did not change in April 2026.
Do I have to file a tax return if I earn over £150,000?
Not automatically. Employees taxed fully through PAYE no longer need to file just because of high income, but many still need to for other reasons, such as claiming pension relief.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance in October 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.