How income tax works in the UK
UK income tax is progressive, which means different slices of your salary are taxed at different rates. You don't pay a single flat rate on your whole income — each pound is taxed only at the rate that applies to its band. That's why earning a bit more never leaves you worse off (with the exception of the 60% trap above £100,000, covered below).
Everyone gets a tax-free personal allowance of £12,570 per year — the first slice of your income you pay nothing on. Above that, the basic rate (20%) applies up to £50,270. Beyond that comes the higher rate (40%) up to £125,140, and finally the additional rate (45%) on everything above.
Worked example: someone earning £35,000 pays 0% on the first £12,570 (£0), then 20% on the remaining £22,430 (£4,486). Total income tax: £4,486. They also pay 8% National Insurance on income between £12,570 and £50,270, which adds another £1,794. That leaves a take-home of roughly £28,720 — about £2,393 per month.
2026/27 income tax bands
These are the rates and thresholds for the 2026/27 tax year in England, Wales, and Northern Ireland. Scotland sets its own bands (see below).
| Band | Taxable income | Rate |
|---|---|---|
| Personal allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 – £50,270 | 20% |
| Higher rate | £50,271 – £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
Scotland has different tax bands
If you live in Scotland, you pay Scottish income tax on your non-savings, non-dividend income. Scotland uses six bands rather than four, with rates of 19%, 20%, 21%, 42%, 45%, and 48%. Thresholds also differ from the rest of the UK. This calculator covers England, Wales, and Northern Ireland only — Scottish rates will be added in a future update. Your residency for tax purposes is determined by where you live for the majority of the tax year, not by where you work.