6 April 2026
How UK tax bands work in 2026/27
A plain-English guide to how Income Tax bands, the Personal Allowance, and National Insurance thresholds fit together.
"Tax bands" is one of those phrases everyone's heard but few people can actually explain. The good news is the underlying idea is simple: UK Income Tax is progressive, which means different slices of your income are taxed at different rates, not your whole income at one rate.
A common misconception is that moving into a higher tax band means all of your income suddenly gets taxed at the higher rate. It doesn't. Only the portion of income that falls within that band is taxed at that band's rate. Everything below it is still taxed at the lower rates that applied to those slices.
The Personal Allowance
Before any bands come into play, most taxpayers get a Personal Allowance: £12,570 of income you can earn each tax year completely tax-free. It's been frozen at this level since April 2021 and is due to stay there until April 2031.
If your adjusted net income goes above £100,000, the Personal Allowance starts shrinking: by £1 for every £2 you earn over that threshold. It disappears entirely once your income reaches £125,140. This is why earnings between £100,000 and £125,140 effectively get taxed at a higher rate than the 40% higher rate band suggests: you're paying tax on the income itself, and losing tax-free allowance at the same time.
Income Tax bands in England, Wales, and Northern Ireland
Here's how your total income maps onto the three bands, assuming you get the standard £12,570 Personal Allowance:
- Basic rate: 20% on total income from £12,571 to £50,270 (the first £37,700 above your Personal Allowance)
- Higher rate: 40% on total income from £50,271 to £125,140 (the next £74,870 above that)
- Additional rate: 45% on total income above £125,140
Income Tax bands in Scotland
Income Tax is partly devolved, and Scotland sets its own bands and rates for anyone whose main home is there. For 2026/27 there are six bands instead of three:
- Starter rate: 19% up to £16,537 of total income
- Basic rate: 20% up to £29,526
- Intermediate rate: 21% up to £43,662
- Higher rate: 42% up to £75,000
- Advanced rate: 45% up to £125,140
- Top rate: 48% above £125,140
These Scottish thresholds also assume the standard £12,570 Personal Allowance, which tapers away above £100,000 of adjusted net income in the same way as the rest of the UK. They only apply to non-savings, non-dividend income too, things like salary, pensions, and self-employment profit. Savings interest and dividends are still taxed using UK-wide rates and bands, even for Scottish taxpayers, since those aren't devolved.
A worked example
Say you earn £60,000 a year in England, Wales, or Northern Ireland. The first £12,570 is tax-free. The next £37,700 (taking you to £50,270) is taxed at 20%, which comes to £7,540. The remaining £9,730 (from £50,270 to £60,000) falls in the higher rate band and is taxed at 40%, coming to £3,892.
Add those together and the total Income Tax bill is £11,432. Even though £60,000 sits well within the 40% band, you're not paying 40% on all of it.
Why your effective tax rate is lower than your top rate
In that example, £11,432 of tax on £60,000 of income works out at an effective rate of about 19.1%, nowhere near the 40% headline rate that applies to your top slice of income. This gap between your marginal rate (the rate on your next pound of income) and your effective rate (the average rate across everything you earn) is normal, and it's the whole point of a banded system.
National Insurance thresholds
Income Tax isn't the only deduction from your pay. If you're an employee, you also pay Class 1 National Insurance, worked out using its own separate thresholds rather than the Personal Allowance.
For 2026/27, employees pay nothing on the first £12,570 of earnings (the Primary Threshold), then 8% on earnings up to £50,270 (the Upper Earnings Limit), then 2% on anything above that. These thresholds are the same across England, Wales, Scotland, and Northern Ireland, since National Insurance isn't devolved. NI is also normally worked out per pay period rather than as a single annual calculation, so our National Insurance Calculator gives an annualised estimate for a standard employee with evenly spread earnings, rather than a guaranteed pay-period figure.
If you want the numbers for your own income, our Income Tax Calculator and Salary Calculator apply these bands automatically, including the Personal Allowance taper and the Scotland/rest-of-UK split. Our National Insurance Calculator covers the NI side separately.