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
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.
A plain guide to how the UK income tax bands and rates fit together for 2026/27.
The 60% band nobody votes for
The published rates say 20%, 40% and 45%. The real schedule has a fourth band hiding between £100,000 and £125,140, where the effective rate is 60%, and it exists because the personal allowance is withdrawn at £1 for every £2 of income over £100,000.
Follow the numbers. Earn £1,000 over £100,000 and you pay £400 of tax on it at the higher rate. But you also lose £500 of personal allowance, which drags £500 of income that was tax free into the 40% band, costing another £200. Total tax on the £1,000 is £600. Someone on £110,000 is keeping less of each extra pound than someone on £150,000, which is absurd, but it has survived every Budget since 2010 because it raises money quietly.
It is also the band where planning works hardest. A pension contribution that brings taxable income from £110,000 back to £100,000 gets 60% effective relief, meaning a £10,000 gross contribution has a net cost of £4,000. Salary sacrifice does the same while saving National Insurance as well. For anyone in this band with childcare, the stakes are even higher, because £100,000 is also the cliff edge for tax free childcare and the free hours entitlement, where a single pound of extra income can cost a family thousands in lost support. This is the one part of the tax system where we tell clients to plan their December bonus conversations in November, not April.
Frozen thresholds are the real tax rise
The personal allowance has been £12,570 and the higher rate threshold £50,270 since April 2021. Nothing about the rates changed, yet the tax take from ordinary earners has risen sharply, because wages have grown while the lines stayed still. A salary that tracked inflation since 2021 has crossed into bands it was never in before. This is fiscal drag, and it is why millions more people now pay higher rate tax than in 2021, why more pensioners pay tax on little more than the state pension, and why more savers breach the personal savings allowance, which drops from £1,000 to £500 the moment you become a higher rate taxpayer, at exactly the time frozen thresholds are pushing people across that line.
The practical response is to treat the thresholds as planning targets. £50,270 matters for the personal savings allowance and for dividend rates. £60,000 is where the child benefit charge begins. £100,000 matters for the reasons above. Pension contributions and Gift Aid both extend your basic rate band, which is the mechanism most people use without realising, and a well timed contribution can hold you under a threshold in a year when a bonus or an overlap of jobs would otherwise tip you over.
Scotland runs its own table
If you live in Scotland, employment and rental income is taxed on Scottish bands, which now include an intermediate rate, a higher rate of 42% and an advanced rate of 45% before the top rate, with higher rate tax starting at a lower income than in the rest of the UK. Savings and dividend income stays on the UK bands even for Scottish residents, so a Scottish company director literally uses two different tax tables on the same return. Which table applies depends on where you live during the tax year, not where your employer sits, something remote workers moving between Scotland and England need to flag to payroll, because the S prefix on a tax code is easy to miss.