What is Income Tax?
Income Tax is a tax on your earnings, collected by HMRC. Most people pay Income Tax through the PAYE (Pay As You Earn) system, where your employer deducts tax from your wages before you receive them.
The amount of tax you pay depends on how much you earn and which tax band your income falls into. The UK uses a progressive tax system, meaning higher earners pay a higher percentage of their income in tax.
2025/26 Tax Bands (England, Wales & NI)
| Tax Band | Income Range | Rate |
|---|---|---|
| Personal Allowance | £0 - £12,570 | 0% |
| Basic Rate | £12,571 - £50,270 | 20% |
| Higher Rate | £50,271 - £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
View complete tax bands guide including Scottish rates and historical data.
Scottish Tax Bands 2025/26
Scotland has different income tax rates set by the Scottish Parliament. If you live in Scotland, these rates apply to your non-savings, non-dividend income.
| Tax Band | Income Range | Rate |
|---|---|---|
| Starter Rate | £12,571 - £14,876 | 19% |
| Basic Rate | £14,877 - £26,561 | 20% |
| Intermediate Rate | £26,562 - £43,662 | 21% |
| Higher Rate | £43,663 - £75,000 | 42% |
| Advanced Rate | £75,01 - £125,140 | 45% |
| Top Rate | Over £125,140 | 48% |
Personal Allowance Explained
The Personal Allowance is the amount you can earn tax-free each year. For 2025/26, this is £12,570.
The 60% Tax Trap
Earning between £100,000 and £125,140? You face an effective 60% marginal tax rate due to losing your Personal Allowance.
Example: Earn £100 more in this band = £40 tax + £20 lost allowance = £60 total
See your effective rate →How to Legally Reduce Your Tax Bill
Pension Contributions
Contributions receive tax relief at your marginal rate. A £100 pension contribution costs a basic rate taxpayer just £80.
Pension Calculator →Salary Sacrifice
Exchange salary for benefits like pensions or cycle schemes to save both Income Tax and National Insurance.
Salary Sacrifice Calculator →Check Your Tax Code
An incorrect tax code can mean you pay too much or too little tax. The standard code for 2025/26 is 1257L.
Tax Code Calculator →Marriage Allowance
Transfer £1,260 of your Personal Allowance to your spouse if they earn more than you. Worth up to £252 a year.
Learn more →Gift Aid
Higher and additional rate taxpayers can claim back 20-25% of charitable donations through Self Assessment.
Learn more →Use Your ISA
Savings and investments in an ISA are completely tax-free. The annual allowance is £20,000.
Learn more →Related Calculators
Related Glossary Terms
Frequently Asked Questions
Ready to Calculate Your Tax?
Use our free UK salary calculator to see exactly how much Income Tax, National Insurance, and other deductions you'll pay.