Income tax is the UK government's tax on earnings from employment, self-employment, pensions, rental income and some savings interest. It is collected by HMRC either through PAYE (Pay As You Earn — deducted automatically by your employer) or through Self Assessment (completed annually for the self-employed and those with complex affairs).
In the 2026/27 tax year (6 April 2026 to 5 April 2027), income tax in England, Wales and Northern Ireland is charged at three main rates depending on how much you earn above the personal allowance. Scotland has its own rates, set separately by the Scottish Parliament.
Crucially, income tax is not applied to your entire salary. You have a personal allowance — a tax-free amount — and you only pay tax on earnings above that threshold.
Here are the income tax rates and bands for England, Wales and Northern Ireland in 2026/27:
| Band | Taxable Income | Tax Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 – £50,270 | 20% |
| Higher Rate | £50,271 – £125,140 | 40% |
| Additional Rate | Above £125,140 | 45% |
Note: the higher rate band starts at £50,271, not £50,000. This is because you add the personal allowance (£12,570) to the basic rate band (£37,700) to get £50,270 — the point at which higher rate begins.
A common misconception is that if you earn £55,000, you pay 40% on your entire salary. That is not how it works.
Income tax is marginal — you pay each rate only on the slice of income that falls within each band. Think of it like filling buckets. The first £12,570 goes into the 0% bucket (tax free). The next £37,700 (up to £50,270) goes into the 20% bucket. Only earnings above £50,270 go into the 40% bucket.
This is why your effective tax rate (the percentage of total income paid in tax) is always lower than your marginal rate (the rate on the last pound earned).
Gross salary: £30,000
Personal allowance: £12,570 → Tax: £0
Remaining £17,430 taxed at 20% → Tax: £3,486
Total income tax: £3,486/year (£290/month)
Effective rate: 11.6% of total salary
Gross salary: £55,000
Personal allowance: £12,570 → Tax: £0
Basic rate band (£12,571–£50,270) = £37,700 taxed at 20% → Tax: £7,540
Higher rate slice (£50,271–£55,000) = £4,730 taxed at 40% → Tax: £1,892
Total income tax: £9,432/year (£786/month)
Effective rate: 17.1% of total salary
Gross salary: £80,000
Personal allowance: £12,570 → Tax: £0
Basic rate slice (£37,700) at 20% → Tax: £7,540
Higher rate slice (£80,000 − £50,270 = £29,730) at 40% → Tax: £11,892
Total income tax: £19,432/year (£1,619/month)
Effective rate: 24.3% of total salary
Enter your salary and see income tax, National Insurance and take-home pay broken down by month and year.
Use the Take-Home Pay Calculator →If your income exceeds £100,000, your personal allowance is gradually withdrawn. For every £2 you earn over £100,000, you lose £1 of your personal allowance. This creates a peculiarity:
The 60% tax trap: A salary of £101,000 is taxed more punitively than £99,000 in percentage terms. If your income is near £100,000, making pension contributions to bring your adjusted net income below that threshold can save thousands. A £10,000 pension contribution restores £5,000 of personal allowance, saving £2,000 in tax on top of the 40% relief on the contribution itself.
There are several legitimate ways to reduce the income tax you pay:
Scottish taxpayers pay different income tax rates, set annually by the Scottish Parliament. Scotland has more bands than the rest of the UK, including a starter rate (19%), basic rate (20%), intermediate rate (21%), higher rate (42%), and additional rate (48%).
The Scottish rates apply to non-savings, non-dividend income only. National Insurance is set by Westminster and applies UK-wide.
UKCalc calculators use England, Wales and Northern Ireland rates. If you are a Scottish taxpayer, use the Scottish Government's own tools or speak to a Scottish accountant for accurate figures.