Written by the TaxTune Editorial Team·Reviewed by our qualified accountants·Updated June 2026

How the bands work

Income tax in England, Wales and Northern Ireland is charged in slices, not all at one rate. Everyone starts with a tax free amount called the personal allowance, which is 12,570 for 2026/27 and remains frozen. You pay nothing on income within that allowance.

Above the allowance, the basic rate of 20 percent applies to income from 12,571 up to 50,270. The higher rate of 40 percent then applies from 50,271 up to 125,140. Anything above 125,140 is taxed at the additional rate of 45 percent.

The point that trips many people up is that only the income falling within each band is taxed at that band rate. Moving into the higher rate band does not mean all of your income is suddenly taxed at 40 percent. It only means the portion above 50,270 is. You can read more in our guide to the personal allowance.

A worked example

Worked example

Tax on a 60,000 salary

Priya earns 60,000 a year. Her first 12,570 is covered by the personal allowance, so no tax is due on that slice. The next slice, from 12,571 to 50,270, is 37,700 taxed at 20 percent, giving 7,540. The final slice, from 50,271 to 60,000, is 9,730 taxed at 40 percent, giving 3,892. Her total income tax for the year is 11,432. Even though she is a higher rate taxpayer, most of her income is still taxed at 20 percent or not at all.

If you want to test your own figures, our tax calculators let you enter a salary and see the breakdown by band in seconds.

The 60 percent trap over 100,000

There is an effective rate higher than 45 percent hiding in the system. Once your income passes 100,000, your personal allowance is reduced by 1 for every 2 of income above that level. By the time income reaches 125,140 the allowance has gone completely.

This taper means that for every extra 100 earned in the band between 100,000 and 125,140, you lose 50 of allowance, which is then taxed at 40 percent. Combined with the 40 percent on the income itself, you face an effective marginal rate of 60 percent on that slice. It is one of the harshest points in the whole system and catches people who do not realise it exists.

There are legitimate ways to manage income around this threshold, such as pension contributions or charitable giving, which can restore some or all of the allowance. Our notes on tax planning explain the options in more detail.

A note on Scotland

If you are a Scottish taxpayer, the figures above do not apply in full. Scotland sets its own income tax bands and rates, which differ from the rest of the UK. The personal allowance is the same because it is set UK wide, but the rates and the points at which they apply are decided by the Scottish Parliament.

Whether you are a Scottish taxpayer usually depends on where your main home is, not where you work. If you have moved across the border during the year, it is worth checking your status so the right rates are applied to your earnings.

What you should do

Start by understanding which band each part of your income falls into. For most employed people the right amount is taken automatically through their tax code, but errors do happen, especially after a pay rise, a bonus or a change of job.

If you have more than one source of income, or income that is not taxed at source, you may need to report it through Self Assessment. If your income is near 100,000, get advice early rather than at the year end, because the planning options work best while there is still time to act. To talk through your position, start your quote.

In short

A plain guide to how the UK income tax bands and rates fit together for 2026/27.

Frequently asked questions

Does earning more ever leave me worse off?
In normal bands, no, because only the income within each band is taxed at that band rate, so a pay rise always leaves you with more after tax. The exception is the band between 100,000 and 125,140, where the loss of the personal allowance creates an effective 60 percent rate. You are not worse off overall, but you keep a much smaller share of that slice.
What is the additional rate and when does it apply?
The additional rate is 45 percent and applies to taxable income above 125,140 for 2026/27. There is no personal allowance left at that level because the taper has removed it. Only the income above 125,140 is taxed at 45 percent, not your whole income.
Are the bands the same across the whole UK?
The bands described here apply in England, Wales and Northern Ireland. Scotland sets its own bands and rates, so Scottish taxpayers face a different structure. The personal allowance of 12,570 is set UK wide and applies everywhere.
How do I know if I am a higher rate taxpayer?
You become a higher rate taxpayer once your taxable income passes 50,270 for 2026/27. Only the income above that figure is taxed at 40 percent. Many people who cross the threshold are surprised to learn that the bulk of their income is still taxed at the basic rate or covered by the allowance.
Do dividends and savings use the same bands?
Dividends and savings have their own allowances and rates that sit alongside the main bands. The dividend allowance is 500 and the personal savings allowance is 1,000 for basic rate taxpayers and 500 for higher rate taxpayers. The band your other income falls into still affects the rate charged on dividends and savings above those allowances.