Tax rates 2026/27
Break down the tax you'll pay
Keeping track of tax rates can help you to better understand your income and how much of it stays in your pocket. This guide covers the latest Income Tax rates, your Personal Allowance, National Insurance and more for the 2026/27 tax year.
The main taxes affecting your earnings
In this guide we focus on the main taxes affecting your income, savings and investments, showing rates for the 2026/27 tax year, which started on 6 April 2026. Read on to learn more about...
Your Personal Allowance. Find out how much you can earn without paying any Income Tax.
Income Tax. See the latest tax brackets and rates for England, Wales, Scotland and Northern Ireland.
National Insurance. Check employee and self-employed rates, and how they may affect your take-home pay.
Capital Gains Tax. Learn when you might need to pay tax after selling or giving away certain assets.
Dividend Tax. See how dividends are taxed and learn about the tax-free Dividend Allowance.
Inheritance Tax. Learn current Inheritance Tax thresholds, rates and the main exemptions that could apply.
Personal Allowance
Each of us has a Personal Allowance – aka a Personal Tax Allowance. This is simply how much you can earn before you start paying Income Tax. For most people, it's £12,570 in 2026/27.
If you earn more than your Personal Allowance, you only pay Income Tax on the amount above it.
Income | Your Personal Allowance |
|---|---|
Under £100,000 | £12,570 |
£100,000 to £125,140 | Reduced by £1 for every £2 earned between £100,000 and £125,140 |
Over £125,140 | £0 |
Are you blind or severely sight impaired? You might be able to claim an additional Blind Person's Allowance of £3,250.
Married couples can share their allowance
If you're married or in a civil partnership, you may be able to share your allowance.
-
If you and your partner were born on or after 6 April 1935, then you may be entitled to the Marriage Tax Allowance. This allows couples to transfer a portion of their Personal Allowance between them. For the 2026/27 tax year, the Marriage Tax Allowance is £1,260. This means a potential tax saving of £252.
-
Alternatively, if one of you was born before 6 April 1935, you may be able to claim Married Couple's Allowance instead, which is also available to civil partners.
Ten per cent of the Married Couple's Allowance is subtracted from your annual Income Tax bill. If you were married before 5 December 2005, it's automatically worked out using the husband's income. For couples married on or after 5 December 2005, it uses the highest earner's salary.
Check out the Government's Married Couple's Allowance calculator to see your eligibility and what exactly you'll get.
The Personal Savings Allowance
Since April 2016, banks and building societies have paid savings interest tax-free, and the Personal Savings Allowance (PSA) has come into play.
The PSA lets basic-rate (20%) taxpayers earn up to £1,000 of savings interest tax-free each tax year, while higher-rate (40%) taxpayers can earn up to £500. Additional-rate (45%) taxpayers don't get a Personal Savings Allowance.
If your savings interest is more than your allowance, you usually pay Income Tax at your normal rate on the amount above the allowance.
The Starting Rate for Savings Income allowance
On a low income? You could get up to an extra £5,000 of savings interest tax-free through the Starting Rate for Savings.
If your earnings from other income (such as your pension or work) is under the Personal Allowance (£12,570), you'll get the full £5,000. This means you can earn up to £5,000 in savings interest without being taxed. You lose £1 of the £5,000 Starting Rate for Savings for each £1 you earn above £12,570. You don't get any of the starting rate if your work or pension income is above £17,570. There's more info in our Tax-free savings guide.
Be aware of the £100,000 'tax trap'
If your income is over £100,000, be aware of what's often called the £100,000 tax trap. For every £2 you earn over £100,000, you lose £1 of your Personal Allowance. By the time your income reaches £125,140, it disappears completely.
Because you're paying 40% Income Tax on your earnings above £100,000 (45% on relevant income in Scotland) and gradually losing your Personal Allowance, this portion of your income can essentially be taxed at a much higher rate than you might expect.
If you're close to this threshold, it's worth checking whether pension contributions or Gift Aid donations could reduce your adjusted net income, which may help you keep more of your Personal Allowance.
HM Revenue & Customs has more info on how your Personal Allowance and Income Tax work, including how tax reliefs can reduce what you pay. If you need guidance from a professional, see our guide to financial advisers.
How tax works
On his spin-off BBC Not The Martin Lewis Podcast, MoneySavingExpert.com founder and chair Martin Lewis takes on subjects he doesn't usually cover, by putting your questions to a team of specialists. And this time, it's tax.
Listen to 'How tax works June 2024' for free via
BBC Sounds | Apple | Spotify
It includes detail on who needs to do a tax return, crypto tax, how tax codes work, tax breaks, a hidden savings allowance, Capital Gains & more...
Income Tax
Once you know your Personal Allowance, anything extra earned above that will be taxable income and therefore subject to Income Tax.
What is Income Tax?
Income Tax is charged on income including salary, pensions, rental income and, in some cases, savings interest and dividend payments.
How much Income Tax you pay depends primarily on how much you earn, and any tax-free allowances or reliefs you're entitled to.
Most employees pay Income Tax automatically through HM Revenue & Customs' Pay As You Earn (PAYE) system, which means you get your pay with Income Tax and National Insurance already taken off.
If you're self-employed or you have other untaxed income, you may need to complete a self-assessment tax return.
What Income Tax band am I in?
The band you're in depends on how much you earn and where in the UK you live.
If you live in England, Wales or Northern Ireland...
There are three main Income Tax bands for England, Wales and Northern Ireland:
-
The 20% basic rate
-
The 40% higher rate
-
The 45% additional rate
Here are all of England, Wales and Northern Ireland's Income Tax rates and the salary bands they're paid on...
Tax bracket | Rate | Taxable income |
|---|---|---|
Personal Allowance | 0% | Up to £12,570 for most |
Basic rate | 20% | From £12,571 to £50,270 for most |
Higher rate | 40% (1) | From £50,271 to £125,140 for most |
Additional rate | 45% | From £125,141 |
(1) Personal Allowance drops by £1 for every £2 earned between £100,000 and £125,140.
Income Tax is charged using marginal rates, which means you only pay the rate on the portion of your income that falls within that band.
Example: You earn £60,000 (England, Wales or Northern Ireland)
Even though £60,000 puts you in the 40% tax band, you don't pay 40% tax on all of your income.
The first £12,570 is covered by your Personal Allowance, so no Income Tax is due.
The next £37,700 is taxed at 20%.
Only the remaining £9,730 is taxed at 40%.
Need a fuller estimate of what you'd pay? Use our free Income Tax Calculator.
If you live in Scotland...
There are six marginal Income Tax bands: the starter rate of 19%, the 20% basic rate, the 21% intermediate rate, the 42% higher rate, the 45% advanced rate and the 48% top rate.
Tax bracket | Rate | Taxable income |
|---|---|---|
Personal Allowance | 0% | Up to £12,570 for most |
Starter rate | 19% | £12,571 to £16,537 for most |
Basic rate | 20% | £16,538 to £29,526 for most |
Intermediate rate | 21% | £29,527 to £43,662 for most |
Higher rate | 42% | £43,663 to £75,000 for most |
Advanced rate | 45% (1) | From £75,001 to £125,140 for most |
Top rate | 48% | From £125,141 |
(1) Personal Allowance drops by £1 for every £2 earned between £100,000 and £125,140.
As in the rest of the UK, you only pay each tax rate on the part of your income that falls into that band...
Example: You earn £60,000 (Scotland)
Even though £60,000 puts you in Scotland's 42% higher-rate tax bracket, you don't pay 42% tax on all of your income.
The first £12,570 is covered by your Personal Allowance, so no Income Tax is due.
The next £3,967 is taxed at 19%.
The next £12,989 is taxed at 20%.
The next £14,136 is taxed at 21%.
Only the remaining £16,338 is taxed at 42%.
Want to find out exactly what you'd pay? Use our free Income Tax Calculator.
Do you submit self-assessment tax returns?
The final deadline for most people to submit their self-assessment tax return online and pay any tax owed is 31 January following the tax year in question. So, for the current tax year, 2026/27, which ends on 5 April 2027, the final online filing and payment deadline is 31 January 2028.
Earlier deadlines apply in some cases, such as if you want to submit a paper return or pay your bill through your Pay As You Earn tax code.
If you need help filling in your self-assessment tax return, you can:
-
Ask someone for assistance (such as an accountant or a friend).
-
Watch HMRC's videos on how to complete an online tax return.
-
Contact HMRC for help online or by telephoning 0300 200 3310.
Learn more in our Self-assessment for beginners guide.
Are you a sole trader or landlord? 'Making Tax Digital' may now apply to you
From 6 April 2026, sole traders and landlords need to use Making Tax Digital for Income Tax, if their qualifying income was over £50,000 in the 2024/25 tax year. This new service involves keeping digital records and sending updates to HMRC every three months using certain compatible software.
The rules are being rolled out to more people over the next few years, so read our Making Tax Digital guide to see whether you need to use it, what you'll need to do and the key deadlines.
Want more Income Tax info?
Watch MoneySavingExpert.com founder Martin Lewis give a quick rundown on Income Tax...
Read the full transcript
This is a beginner's guide to how Income Tax works. I'm Martin Lewis from MoneySavingExpert.com. Now, this is a thorny, complicated subject, but I want to try and keep it as simple as possible. The first thing to say is most people get a Personal Allowance. That is how much money you are allowed to earn each year before you pay any tax on it.
The typical number is £12,570. So if you earn less than that, and that's total earnings from work and from a pension or interest on your savings, if you earn less than that, it isn't taxed. If you earn more than that, some of it is taxed. And the "some of it" is crucial. If your allowance is £12,570 and you earn more, it's only the bit above that that you pay 20% tax on.
So let's imagine you earn £13,570. That's £1,000 above the threshold. You pay 20% tax on the £1,000. You pay £200 tax. You don't pay 20% tax on the entire amount you've earned. And that happens every time you go above a threshold. You only pay the increased rate on the amount above the threshold. Why is that important?
Because I've actually had some people who say to me, "They've just offered me money, I'm going to get a pay rise. It's going to put me up a tax threshold. I should say no, shouldn't I, because it means I'll take home less?" Incorrect. Earn more; you will take home more.
But, of course, what that does mean is the rate above £12,570 is 20%, so every £1 you earn above that, you take home 80p after Income Tax. There's also National Insurance, but we're keeping it simple, I'm going to ignore that. Now you continue to pay that 20% rate until, typically, earnings of £50,270 a year. Once you hit above that, the tax rate is 40%. So then every £1 you earn, 40 pence is taken off.
You take home 60p. But remember that's only on above the threshold. Now you would think that continues until the tax rate is increased again, which happens in the last tax threshold of £125,000. But it doesn't, because something funny happens once you start to earn £100,000, if you're lucky enough to. Once you get to £100,000, you start to lose your Personal Allowance.
Remember that £12,570 that you can earn tax-free? Once you hit £100,000, each pound over you go, you start to lose the Personal Allowance. And what that effectively means is, from earnings from £100,000 to around £125,000, your effective tax rate is 60%. In other words, for every £1 you earn in that threshold, you only take home 40p.
Then, finally, we get to the top rate of tax, which is for people generally who earn over £125,140. By the way, all these tax thresholds are England, Wales and Northern Ireland. It's slightly different in Scotland, but the principle's the same. Above £125,140, the rate is 45%, which means for every £1 you earn you would take home 55p.
So this is a little bit quirky if you think about it. Up to £12,570: no tax. £12,570 to around £50,000: on that bit you pay 20%. Then, above £50,000, up to £100,000: you're paying 40%. From £100,000 up to £125,000: you're effectively paying 60%. And then above £125,000, on money earned above that, you're paying 45% in tax.
Final thought before I go on this... There have not been headline Income Tax raises for a couple of years because what's actually happened is they've increased Income Tax revenue via a stealth tax, which is called 'fiscal drag'. Now, that isn't when chancellors wear rouge. What fiscal drag means is they have frozen all of those thresholds. So let's take the basic Personal Allowance, the £12,570.
If you were earning under that before and your income is increased due to earnings going up and earnings have gone up and inflation gone up, and it puts you above the threshold and they haven't moved the threshold, suddenly you start paying tax on your earnings, while you haven't before, even though prices have gone up, inflation means prices have gone up. Which effectively means your earnings are going to be taxed on the same equivalent rate because all prices have gone up... with inflation, [higher] than they were before. And that has happened to every threshold level. And this fiscal drag, freezing the thresholds, is the way that the current government, the Labour Government and the past Conservative Government, have increased revenue from Income Tax without changing the tax rates. Now, that is a very basic one-on-one, 101 rather, on Income Tax.
I hope it makes sense. There are a lot more complexities and I haven't factored in National Insurance, which is effectively a form of Income Tax too. But I just wanted to give you a beginner's guide.
National Insurance
While National Insurance (NI) is separate from Income Tax, it also affects your take-home pay.
NI rates are UK-wide, so the standard rates are the same in Scotland as in England, Wales and Northern Ireland.
Employee National Insurance rates
Most employees have Income Tax and NI deducted through the Pay As You Earn system. Employee NI generally applies from age 16 until State Pension age if your earnings are above the relevant threshold.
The table below shows the standard employee NI rates for 2026/27. Employee NI is worked out each time you're paid, not from one annual total, so the annual figures are only a rough guide.
Weekly pay | Annual figure used as rough estimate | Standard employee NI rate |
|---|---|---|
Under £242 | Under £12,570 | No National Insurance payable |
£242 to £967 | £12,570 to £50,270 | 8% |
Over £967 | Over £50,270 | 8% on earnings between £242 and £967 a week, 2% on everything above that |
Some advanced National Insurance rules are complicated. See the HM Revenue & Customs website for full rates.
The annual figures are most useful if all your pay comes from one job, you work there throughout the tax year and earn roughly the same amount each payday. Your actual NI may differ if, for example, you have more than one job, variable pay or work for only part of the tax year.
These are standard rates and may not apply in every circumstance. See Gov.uk's employee National Insurance rates for full info.
What if I'm self-employed?
If you're self-employed, Class 4 National Insurance contributions (NICs) are normally calculated through self-assessment, on your profits after allowable expenses. They're usually due if your profits are over £12,570 a year.
Most self-employed people no longer have to pay Class 2 NICs. If your profits are below £7,105, you can pay them voluntarily at £3.65 a week to help protect your National Insurance record and retain access to certain benefits, including the State Pension. If your profits are £7,105 or more, Class 2 contributions are treated as having been paid.
Annual profits | Class 4 NIC rate |
|---|---|
Up to £12,570 | No National Insurance payable |
£12,571 to £50,270 | 6% |
Over £50,270 | 6% on profits between £12,571 and £50,270, 2% on profits above that |
Some advanced National Insurance rules are complicated. See the HM Revenue & Customs website for full rates.
Special rules can apply to certain roles and jobs, including landlords, examiners, moderators, invigilators and people who set exam questions. See Gov.uk's self-employed National Insurance rates for more information.
Have gaps in your National Insurance record?
Not paying employee NI doesn't always mean there's a gap in your record, as some earnings can still count towards certain benefits and the State Pension. But if you do have gaps – for example, because you had periods when you weren't working or were living abroad – it could mean you don't qualify for the full State Pension.
If you want to plug these gaps, you may be able to pay voluntary Class 3 NICs. For more information, see our National Insurance contributions guide.
Weekly rate | Annual rate |
|---|---|
£18.40 | £956.80 |
Some advanced National Insurance rules are complicated. See the HM Revenue & Customs website for full rates.
Capital Gains Tax
Capital Gains Tax (CGT) is a tax on the profit you make when you sell or give away certain assets – not the total amount you sell them for.
For 2026/27, individuals generally have a £3,000 'annual exempt amount', so only gains above this amount are taxed. It doesn't usually apply to your main home, car or any lottery winnings, though there are exceptions.
Tax bracket | Rate |
|---|---|
Annual allowance | Up to £3,000 tax-free |
Basic rate | 18% on residential property and other assets |
Higher and additional rate | 24% on residential property and other assets |
How much Capital Gains Tax you pay depends on your other taxable income. See Gov.uk for more on how to work this out.
If you sell a UK residential property and Capital Gains Tax is due, you generally have 60 days from completion of the sale to report it and pay HM Revenue & Customs.
What if I give or sell assets to my spouse?
If you're married or in a civil partnership, transferring assets between you can help make the most of both of your £3,000 CGT annual exempt amounts for 2026/27.
The good news is there's normally no CGT to pay when you transfer an asset to your spouse or civil partner. Instead, they essentially take on what you originally paid for it, and any CGT is usually put off until they sell.
Separated or divorced? You may still be able to transfer assets without an immediate CGT bill for a time after you permanently separate. This is generally until the earlier of three tax years after the tax year you separated, or divorce/dissolution. Special rules also apply to transfers made as part of a formal separation or divorce agreement or court order.
Different rules can apply if the asset is trading stock.
Dividend Tax
When investing, dividends are a bit like interest on a savings account. If a company makes a profit, it gives some of it back to you – either on a regular basis or as a one-off. And just as you have a Personal Savings Allowance for tax-free interest on savings, you also have a tax-free Dividend Allowance.
The Dividend Allowance is £500 for the 2026/27 tax year. Any dividends received above this allowance are taxed at the rates shown below, which depend on your Income Tax band. That's unless your shares are held in a stocks & shares ISA (where dividends are always tax-free).
You'll usually only pay tax on dividends that aren't covered by your unused Personal (Tax) Allowance or your £500 Dividend Allowance. If tax is due, you must tell HM Revenue & Customs. It's possible to do this by completing a self-assessment tax return.
Tax bracket | Rate |
|---|---|
Dividend Allowance | Up to £500 tax-free |
Basic rate | 10.75% |
Higher rate | 35.75% |
Additional rate | 39.35% |
Inheritance Tax
Inheritance Tax (IHT) can be charged on the value of someone's estate after they die – but most estates won't pay it. There's normally no IHT to pay if:
-
the estate is worth £325,000 or less, OR
-
everything above that is left to a spouse, civil partner or qualifying charity
If neither of the above applies, anything above the £325,000 threshold will be taxed at 40% when you die (or 36% if you leave at least 10% of the value after any deductions to a charity in your will).
In some cases, the amount that can be passed on free of IHT is higher. It can increase to £500,000 where the 'residence nil-rate band' applies, and married couples and civil partners may be able to pass on up to £1 million in total, if both partners' full allowances are available and a qualifying home is left to direct descendants.
The tax-free threshold is frozen until April 2031
The standard £325,000 IHT threshold – known as the nil-rate band – is frozen until 5 April 2031. As estate values rise while the threshold stays the same, more estates will become liable for IHT over time.
From 6 April 2027, most unused pension funds and pension death benefits will also be included in estates for IHT purposes, which could increase the tax due for some.
Our Inheritance Tax guide covers what you need to know in more detail.
Share this guide?
