The 2026/27 income tax bands
Income tax in England, Wales and Northern Ireland is charged on a slice of your income above your Personal Allowance. Each slice is taxed at its own rate — so the first £37,700 of taxable income is taxed at 20%, the next slice at 40%, and anything above that at 45%. The bands for 2026/27 (frozen since 2021/22) are:
| Taxable income slice | Rate |
|---|---|
| Up to £37,700 | 20% (basic rate) |
| £37,701 – £112,570 | 40% (higher rate) |
| Over £112,570 | 45% (additional rate) |
GOV.UK — Income Tax rates and Personal Allowances · 2026/27
Your Personal Allowance — and how it works
Most people get a £12,570 Personal Allowance each year: the first £12,570 of income is tax-free. This means taxable income is your income minus £12,570, and the bands above apply only to what is left. The allowance is frozen and legislated to stay at £12,570 until at least 5 April 2028.
There is an important catch: if your income goes above £100,000, your Personal Allowance is reduced by £1 for every £2 over £100,000. At £125,140 it reaches zero — so people in this range can pay an effective rate far higher than 40% on the tapered slice.
| Income | Personal Allowance | Income tax due |
|---|---|---|
| £50,000 | £12,570 | £7,486 |
| £60,000 | £12,570 | £11,432 |
| £100,000 | £12,570 | £27,432 |
| £110,000 | £7,570 | £33,432 |
| £125,140 | £0 | £43,144.50 |
| £200,000 | £0 | £76,831.50 |
Notice what happens between £100,000 and £125,140: income rises 25% but tax more than doubles from £27,432 to £43,145 — that is the allowance taper in action. Above £125,140 the taper ends and the marginal rate returns to 45%.
Worked example: £60,000 salary
Take a salary of £60,000. First, your Personal Allowance removes £12,570, leaving £47,430 taxable. You pay 20% on the first £37,700 of that (£7,540), then 40% on the remaining £9,730 (£3,892). Total income tax: £11,432. National Insurance is charged separately, and your take-home also depends on pension contributions (which reduce taxable income) and any other income such as interest or dividends.
Scotland has its own bands
Scotland sets its own income tax rates (Starter, Basic, Intermediate, Higher and Top), while the £12,570 Personal Allowance still applies. The worked examples above are for taxpayers in England, Wales and Northern Ireland — check the Scottish Government's rates if you live in Scotland.
Scottish Government — Scottish Budget 2026-27 · income tax · 2026/27
What income counts — and what does not
Income tax applies to employment and self-employment earnings, most pensions, rental income and some benefits. Taxable income is reduced by pension contributions and Gift Aid. Dividends and capital gains are taxed separately at their own rates (see the dividend tax and capital gains tax calculators), and bank interest has its own Personal Savings Allowance. Income inside an ISA is not taxed at all.