UK Tax Bands 2025/26: How Much Tax Will You Pay?

UK income tax for 2025/26 operates through a banded system where you pay different rates on portions of your income. With the personal allowance frozen at £12,570 and tax bands unchanged since 2021, more people are paying higher rates due to "fiscal drag" as wages rise. Understanding your tax band helps you budget accurately and plan tax-efficient strategies.

This guide explains all UK tax bands for 2025/26, shows exactly what you'll pay at different salary levels, and reveals the hidden 60% tax trap affecting £100k+ earners.

Quick Summary

• Personal allowance: £12,570 (tax-free)
• Basic rate: 20% on £12,571-£50,270
• Higher rate: 40% on £50,271-£125,140
• Additional rate: 45% on £125,140+
• 60% trap: Effective 60% rate between £100k-£125k
• Frozen until April 2028: No increases planned

Complete UK Tax Bands 2025/26

England, Wales & Northern Ireland

Band	Income Range	Tax Rate	Tax on Band
Personal Allowance	£0 - £12,570	0%	£0
Basic Rate	£12,571 - £50,270	20%	Up to £7,540
Higher Rate	£50,271 - £125,140	40%	Up to £29,948
Additional Rate	£125,140+	45%	45% of excess

Key points:

• Tax-free on first £12,570
• Total tax at £50,270: £7,540
• Total tax at £125,140: £37,488
• Above £125,140: No personal allowance

Scotland (Different Rates)

Scotland has devolved tax powers with different bands:

Band	Income Range	Tax Rate
Personal Allowance	£0 - £12,570	0%
Starter Rate	£12,571 - £15,397	19%
Basic Rate	£15,398 - £27,491	20%
Intermediate Rate	£27,492 - £43,662	21%
Higher Rate	£43,663 - £75,000	42%
Advanced Rate	£75,001 - £125,140	45%
Top Rate	£125,140+	48%

Scottish earners pay more tax than rest of UK above ~£28,000.

How Tax Bands Work

You DON'T pay your tax band rate on all income – only on income within each band.

Example: £40,000 Salary

Calculation:

• First £12,570: 0% = £0
• Next £27,430 (£12,571-£40,000): 20% = £5,486
• Total income tax: £5,486
• Effective rate: 13.7%

You're in the "basic rate band" but don't pay 20% on everything.

Example: £60,000 Salary

Calculation:

• First £12,570: 0% = £0
• Next £37,700 (basic rate): 20% = £7,540
• Remaining £9,730 (higher rate): 40% = £3,892
• Total income tax: £11,432
• Effective rate: 19.1%

Example: £150,000 Salary

Calculation:

• First £12,570: 0% = £0 (but see 60% trap below)
• Next £37,700: 20% = £7,540
• Next £74,870: 40% = £29,948
• Remaining £24,860: 45% = £11,187
• Total income tax: £48,675
• Effective rate: 32.5%

Tax by Salary: Quick Reference

Annual Salary	Income Tax	National Insurance	Total Deductions	Take-Home	Effective Rate
£20,000	£1,486	£594	£2,080	£17,920	10.4%
£25,000	£2,486	£994	£3,480	£21,520	13.9%
£30,000	£3,486	£1,394	£4,880	£25,120	16.3%
£40,000	£5,486	£2,194	£7,680	£32,320	19.2%
£50,000	£7,486	£2,994	£10,480	£39,520	21.0%
£60,000	£11,432	£3,194	£14,626	£45,374	24.4%
£75,000	£17,432	£3,694	£21,126	£53,874	28.2%
£100,000	£27,432	£4,194	£31,626	£68,374	31.6%
£150,000	£48,675	£5,194	£53,869	£96,131	35.9%

Note: Includes both income tax AND National Insurance (8% up to £50,270, then 2%)

The 60% Tax Trap Explained

Between £100,000-£125,140, you face an effective 60% tax rate due to personal allowance withdrawal.

How It Works

At £100,000:

• Full personal allowance: £12,570

For every £2 earned above £100k:

• Lose £1 of personal allowance
• That £1 becomes taxable at 40%
• Plus pay 40% on the £2 earned
• Effective rate: 60%

At £125,140:

• Personal allowance: £0
• All income taxable

Real Example

Salary: £110,000

Without allowance loss:

• Income tax: £32,432

With allowance loss:

• Lost allowance: £5,000
• Extra tax on lost allowance: £2,000
• Actual income tax: £34,432

On the £10k from £100k-£110k:

• Pay: £6,000 in tax
• Effective rate: 60%

Strategies to Avoid

1. Pension contributions

• Contribute £10,000 to pension
• Reduces taxable income to £100k
• Keeps full personal allowance
• Saves £6,000 in tax

2. Salary sacrifice

• Childcare vouchers
• Electric car scheme
• Cycle to Work
• Reduces gross salary below £100k

3. Gift Aid donations

• Extends basic rate band
• Reduces higher rate tax

4. Timing bonuses

• Split across tax years
• Avoid bunching in 60% zone

Personal Allowance Explained

The personal allowance is the amount you can earn tax-free.

Standard Allowance

2025/26: £12,570

This has been frozen since April 2021 and will remain at this level until April 2028.

Impact of freeze:

• 2021: £12,570
• 2025: £12,570 (same)
• With 3% inflation = Real terms cut of ~12%
• More people paying tax as wages rise

Reduced Allowance (£100k+)

Earn over £100,000? Your allowance reduces:

Formula:

• For every £2 over £100k, lose £1 of allowance
• Allowance fully gone at £125,140

Examples:

• £100,000: Full £12,570 allowance
• £110,000: £7,570 allowance (lost £5,000)
• £120,000: £2,570 allowance (lost £10,000)
• £125,140+: £0 allowance

Marriage Allowance

If you earn under £12,570, you can transfer unused allowance to your spouse:

Transfer: £1,260 (10% of allowance) Saving: £252/year for your partner Eligibility: Partner must be basic rate taxpayer

How to claim:

• Apply via GOV.UK
• Can backdate 4 years
• Automatic renewal once approved

Scottish Tax Bands Comparison

Scottish residents pay different rates:

£40,000 Salary Comparison

England/Wales/NI:

• Income tax: £5,486
• Take-home: £32,320

Scotland:

• Income tax: £6,184
• Take-home: £31,622
• Pay £698 more tax

£60,000 Salary Comparison

England/Wales/NI:

• Income tax: £11,432
• Take-home: £45,374

Scotland:

• Income tax: £13,352
• Take-home: £43,454
• Pay £1,920 more tax

£100,000 Salary Comparison

England/Wales/NI:

• Income tax: £27,432
• Take-home: £68,374

Scotland:

• Income tax: £30,582
• Take-home: £65,224
• Pay £3,150 more tax

Key insight: Scottish taxpayers pay significantly more above £28k salary.

Historical Context: Tax Band Freeze

Tax thresholds have been frozen since 2021:

Tax Year	Personal Allowance	Higher Rate Threshold
2020/21	£12,500	£50,000
2021/22	£12,570	£50,270
2022/23	£12,570	£50,270
2023/24	£12,570	£50,270
2024/25	£12,570	£50,270
2025/26	£12,570	£50,270
2026/27	£12,570	£50,270
2027/28	£12,570	£50,270

Frozen until April 2028

"Fiscal Drag" Impact

With wages rising but thresholds frozen:

Example: £45k salary in 2021

• Basic rate taxpayer
• Tax: £6,486

Same role in 2025: £48k salary (+6.7%)

• Still basic rate
• Tax: £7,086 (+9.3%)

Same role in 2027: £51k salary (+13.3%)

• Now higher rate taxpayer
• Tax: £7,786 (+20% vs 2021)

More people pushed into higher tax bands despite similar real-terms income.

Using Our Tax Calculator

Calculate your exact tax:

1. Enter your annual salary
2. Select your location (England/Wales/NI or Scotland)
3. Add any pension contributions
4. Include student loan plan (if applicable)
5. See instant breakdown:
   • Income tax
   • National Insurance
   • Student loans
   • Take-home pay
   • Effective tax rate

Calculate Your Tax →

Marginal vs Effective Tax Rate

Marginal Rate

The rate you pay on your next £1 earned.

Examples:

• Earning £30k: Marginal rate = 20%
• Earning £60k: Marginal rate = 40%
• Earning £110k: Marginal rate = 60% (!)

Effective Rate

The rate you pay on your total income.

Examples:

• £30k salary: Pay £3,486 = 11.6% effective
• £60k salary: Pay £11,432 = 19.1% effective
• £110k salary: Pay £34,432 = 31.3% effective

Always lower than marginal rate due to personal allowance and banded system.

Tax Planning Strategies

1. Maximize Pension Contributions

Benefit:

• Reduces taxable income
• Gets tax relief at your highest rate
• Avoids 60% trap if near £100k

Example: £110k salary

• Contribute £10k to pension
• Taxable income: £100k
• Save £6,000 in tax
• Net pension cost: £4,000

2. Salary Sacrifice

Sacrifice salary for benefits (before tax):

• Childcare vouchers
• Electric car scheme
• Cycle to Work
• Additional pension

Saves both income tax AND National Insurance

3. Split Income with Spouse

If partner earns less:

• Dividend distribution (if limited company)
• Marriage allowance transfer
• Joint investment accounts

4. Tax-Efficient Investments

• ISAs: Tax-free growth (£20k/year)
• Pensions: Tax relief + growth
• VCTs/EIS: Income tax relief

5. Time Large Payments

• Bonuses across tax years
• Freelance invoicing timing
• Pension contributions before year-end

Frequently Asked Questions

Q: Why do I pay more tax than my tax band percentage? A: You don't! If you're in the 20% basic rate band, you only pay 20% on income above £12,570. Your effective rate is lower than 20% because of the tax-free personal allowance.

Q: When will tax bands increase? A: Current freeze lasts until April 2028. Future increases depend on government policy but likely to rise with inflation after 2028.

Q: Do I pay 40% tax on my whole salary if I earn £60k? A: No! You pay 0% on first £12,570, 20% on next £37,700, and 40% only on the remaining £9,730. Your effective rate is about 19%.

Q: What is the 60% tax trap? A: Between £100,000-£125,140, your personal allowance reduces by £1 for every £2 earned. This creates an effective 60% tax rate. Consider pension contributions to avoid it.

Q: Are Scottish tax bands higher? A: Yes, Scotland has seven bands vs England's three, with higher rates above ~£28k. A £60k salary pays £1,920 more tax in Scotland than England.

Q: Can I get my personal allowance back if I earn over £125,140? A: No, once you earn over £125,140, your personal allowance is fully withdrawn and stays at £0, even if you earn £1 million.

Q: How does marriage allowance work? A: If you earn under £12,570, you can transfer £1,260 to your spouse (if they're a basic rate taxpayer), saving them £252/year. Apply via GOV.UK.

Q: What's the difference between marginal and effective tax rate? A: Marginal is the rate on your next £1 (e.g., 40% if higher rate). Effective is total tax divided by total income (e.g., 19% on £60k salary including allowance).

Related Resources

• Take-Home Pay Calculator - See your net salary
• Income Tax Calculator - Detailed tax calculations
• National Insurance Guide - NI rates explained
• Tax Calculator - Calculate your total deductions

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Official Sources:

• HMRC: Income Tax Rates and Allowances
• GOV.UK: Tax on Your Income
• Scottish Government: Scottish Income Tax

Last updated: December 9, 2024
Disclaimer: Tax bands apply to 2025/26 tax year (6 April 2025 - 5 April 2026). Rates subject to government policy changes. Scottish rates set separately by Scottish Parliament. UK Calculator is not a tax adviser.