The additional rate tax bracket is the top tier of UK income tax, charging 45% on every pound of taxable income above £125,140 for residents of England, Wales, and Northern Ireland. Scotland runs its own system, and its equivalent top rate is 48% above the same £125,140 threshold. Only the slice of income above the line is taxed at that rate; everything below it is taxed through the lower bands on the way up.
The 45% Rate and Where It Starts
For the 2025/26 and 2026/27 tax years, the additional rate applies to taxable income above £125,140.1GOV.UK. Income Tax Rates and Personal Allowances Someone earning £150,000 pays 45% only on the £24,860 that sits above the threshold. The rest is taxed at 20% through the basic rate band (£12,571 to £50,270) and 40% through the higher rate band (£50,271 to £125,140).
These figures apply to non-savings, non-dividend income: wages, self-employment profits, rental income. Savings interest and dividends have their own rates, covered further down. The personal allowance, basic rate band, and higher rate threshold have been frozen since 2021 and are set to stay frozen until at least April 2028, so wage growth alone pulls more people into the additional rate each year.2GOV.UK. Income Tax Rates and Allowances for Current and Previous Tax Years
If You Live in Scotland
Scottish taxpayers face a different rate structure on non-savings, non-dividend income. The top rate is 48% on income above £125,140, three percentage points higher than the rest of the UK.3Scottish Government. Scottish Income Tax 2026 to 2027 Technical Factsheet The £125,140 threshold and the personal allowance taper work identically to the rest of the UK; only the rates differ.
The 60% Trap Between £100,000 and £125,140
Before you even reach the 45% band, there’s a stretch of income that is effectively taxed harder than anything above it. The standard personal allowance of £12,570 begins to disappear once your adjusted net income passes £100,000, shrinking by £1 for every £2 you earn above that mark.4Legislation.gov.uk. Income Tax Act 2007 – Section 35 By £125,140 the allowance is gone entirely.1GOV.UK. Income Tax Rates and Personal Allowances
The mechanics produce a marginal rate of roughly 60% on income in that window. For every extra £2 earned, you lose £1 of allowance, which means an additional £1 of income becomes taxable at 40%. So you pay 40% on the £2 earned plus 40% on the £1 of newly exposed allowance, working out to about 60p in tax for every extra pound. Scottish taxpayers on the 42% higher rate face a marginally steeper version of the same trap. This band, not the 45% band above it, is the most punishing stretch of the system.
How Different Income Types Are Taxed at the Top
Total income from all sources determines whether you fall into the additional rate bracket. Once you’re there, the rate that applies depends on the type of income.
Employment, Self-Employment, and Rental Income
Wages, salaries, bonuses, self-employment profits, and rental income are taxed at the standard 45% additional rate, or 48% in Scotland.5GOV.UK. Income Tax Introduction These income streams are usually what pushes someone over £125,140 in the first place.
Dividends
Dividends have their own rates and a separate £500 tax-free dividend allowance. Additional rate taxpayers pay 39.35% on dividends above that allowance. From April 2026, the additional rate on dividends stays at 39.35%, but the ordinary rate rises to 10.75% and the upper rate to 35.75%.6GOV.UK. Changes to Tax Rates for Property, Savings and Dividend Income
Savings Interest
Basic rate taxpayers get a £1,000 personal savings allowance, higher rate taxpayers get £500, and additional rate taxpayers get nothing. Every pound of savings interest is taxed at 45%.7GOV.UK. Tax on Savings Interest – How Much Tax You Pay
Capital Gains
Capital gains sit outside income tax, but your income tax band sets which capital gains rate applies. From April 2025, additional rate taxpayers pay 24% on gains from residential property and 24% on other chargeable assets. Carried interest from managing an investment fund is taxed at 32%.8GOV.UK. Capital Gains Tax Rates and Allowances
Bringing Your Taxable Income Down
Pension contributions are the most effective way to pull taxable income below £125,140, or at least back into the 60% taper zone where each pound of relief is worth more than 40p. Contributions to a registered pension scheme reduce your taxable income directly, so a £10,000 contribution by someone earning £135,140 would take taxable income down to £125,140 and out of the additional rate entirely. The annual allowance for tax-relievable pension contributions is £60,000 for most people, though it tapers for those with adjusted income above £260,000, floored at £10,000.
Gift Aid donations work along similar lines by extending your basic rate band, and can bring income below the additional rate threshold. Marriage Allowance is not available at this level. The transfer can only be received by a basic rate taxpayer, so if you’re in the additional rate band the relief doesn’t apply.
Self Assessment and the January Bill
If you earn over £125,140 you almost certainly need to file a Self Assessment return. Most people in this bracket have income that isn’t fully taxed at source, whether from self-employment, property, investments, or simply from having lost their personal allowance.
The online filing deadline is 31 January following the end of the tax year. Missing it triggers an immediate £100 penalty even if no tax is owed, with further penalties accruing the longer the return is outstanding.9GOV.UK. Self Assessment Tax Returns – Penalties If you’ve never filed before, you need to register for Self Assessment and receive a Unique Taxpayer Reference before you can submit.10GOV.UK. File Your Self Assessment Tax Return Online
Additional rate taxpayers with significant untaxed income usually face payments on account: advance instalments toward the next year’s tax bill, each typically half of the previous year’s Self Assessment liability. The first falls on 31 January alongside the return, the second on 31 July.11GOV.UK. Understand Your Self Assessment Tax Bill – Payments on Account You’re exempt if last year’s tax owed was under £1,000 or if more than 80% of your tax was already collected at source, but few additional rate taxpayers qualify. A balancing payment to cover any remaining tax is due the following 31 January along with the next first payment on account, which is why the January bill can be heavy if you haven’t set money aside.12GOV.UK. Pay Your Self Assessment Tax Bill