For the 2026/27 tax year, UK tax bands start with a £12,570 Personal Allowance you pay no tax on, then charge 20%, 40%, and 45% on the slices above it in England, Wales, and Northern Ireland. Scotland runs a six-tier system instead, with rates from 19% up to 48%. The thresholds have been frozen since 2021 and are set to stay frozen until at least April 2028, which pulls more earners into higher bands each year as wages rise.1Office for Budget Responsibility. Fiscal Implications of Personal Tax Threshold Freezes and Reductions
The Personal Allowance
Most people can earn £12,570 before paying any income tax at all. The Personal Allowance applies across the whole of the UK regardless of which nation you live in, and it has been held at this level since April 2021.2GOV.UK. Income Tax Rates and Personal Allowances
Two circumstances can lift it. If you’re registered blind or severely sight impaired, the Blind Person’s Allowance adds £3,250 for 2026/27.3GOV.UK. Blind Person’s Allowance The Marriage Allowance lets you transfer £1,260 of unused Personal Allowance to a spouse or civil partner, provided neither of you pays tax above the basic rate.4House of Commons Library. Income Tax Allowances for Married Couples
Income Tax Bands in England, Wales, and Northern Ireland
These three nations share the same rates for 2026/27. Wales sets its own rates through the Welsh Parliament, but they currently match the English figures.5GOV.UK. Income Tax in Wales After subtracting your Personal Allowance, your remaining income is taxed in three bands:
- Basic rate of 20% on income from £12,571 to £50,270
- Higher rate of 40% on income from £50,271 to £125,140
- Additional rate of 45% on income above £125,140
These are the same thresholds in force since 2021/22.2GOV.UK. Income Tax Rates and Personal Allowances Anyone who has had a pay rise since then is more likely to have crossed into the higher band than they would have been under the old system of annual inflation adjustments.
Income Tax Bands in Scotland
Scotland sets its own rates on non-savings, non-dividend income, meaning earnings from employment, self-employment, and pensions. For 2026/27, the Scottish Government widened several bands compared with the previous year:6Scottish Government. Scottish Income Tax 2026 to 2027: Technical Factsheet
- Starter rate of 19% on income from £12,571 to £16,537
- Basic rate of 20% on income from £16,538 to £29,526
- Intermediate rate of 21% on income from £29,527 to £43,662
- Higher rate of 42% on income from £43,663 to £75,000
- Advanced rate of 45% on income from £75,001 to £125,140
- Top rate of 48% on income above £125,140
Lower earners in Scotland keep slightly more before moving into the intermediate band because the starter and basic bands are wider than in 2025/26. At higher earnings, Scottish taxpayers pay noticeably more than their counterparts elsewhere in the UK. Someone earning £60,000 in Scotland pays 42% on the portion above £43,663, while the same earner in England pays 40% only from £50,271. Above £125,140, Scotland’s top rate of 48% sits three percentage points above the additional rate used elsewhere.7Scottish Government. Scottish Income Tax – Current Income Tax Rates
Savings interest and dividend income are not covered by the Scottish bands. Those still follow UK-wide rates even for Scottish taxpayers.
The £100,000 Taper
Once your adjusted net income crosses £100,000, your Personal Allowance starts to shrink. You lose £1 of allowance for every £2 you earn above that threshold, and at £125,140 the allowance disappears entirely.8GOV.UK. Personal Allowances: Adjusted Net Income
Between £100,000 and £125,140, this produces an effective marginal rate of 60%. You pay 40% tax on each extra pound and simultaneously lose 50p of tax-free allowance on that same pound. Pension contributions or charitable donations that bring your adjusted net income back below £100,000 can restore the full allowance, which is why tax planning in that income range often pays for itself several times over.
How Income Gets Applied to the Bands
The word “bands” trips people up because it sounds like your whole salary is taxed at a single rate. It isn’t. Tax is calculated by slicing your income into layers, with each layer taxed only at the rate for that band.
Start with your gross annual income. Subtract your Personal Allowance to get your taxable income. The first slice fills the basic rate band at 20%. Only the portion that overflows into the next band is taxed at 40%, and so on up the tiers.2GOV.UK. Income Tax Rates and Personal Allowances
Take someone earning £60,000 in England. After the £12,570 allowance, taxable income is £47,430. The first £37,700 is taxed at 20%, producing £7,540. The remaining £9,730 is taxed at 40%, producing £3,892. Total income tax: £11,432. That works out at an effective rate of roughly 19% on the full £60,000, well below the 40% headline.
Because of this layering, a pay rise never leaves you worse off overall. Moving into a higher band only affects the extra earnings above the threshold, not the income already being taxed below it. The one real exception is the £100,000 taper, where the effective rate spikes because you’re losing tax-free allowance at the same time.
Tax on Savings and Dividends
Interest and dividends sit in their own set of rates, separate from the earnings bands above. These apply across the whole UK, including Scotland.
Savings Interest
A starting rate of 0% applies to the first £5,000 of savings interest, but only if your other income (after the Personal Allowance) is below £5,000.9GOV.UK. Tax on Savings Interest: How Much Tax You Pay On top of that, the Personal Savings Allowance lets basic rate taxpayers earn £1,000 of interest tax-free, and higher rate taxpayers £500. Additional rate taxpayers get no savings allowance. Interest above these amounts is taxed at your normal income tax rate.
Dividends
Everyone gets a £500 dividend allowance for 2026/27, so the first £500 of dividend income is tax-free. Beyond that, dividends are taxed at rates that changed in April 2026:
- Basic rate taxpayers pay 10.75%
- Higher rate taxpayers pay 35.75%
- Additional rate taxpayers pay 39.35%
These are lower than the rates on employment income at each band, which is one reason company directors sometimes pay themselves partly in dividends. The dividend allowance has been cut sharply in recent years, however. It stood at £2,000 as recently as 2022/23, so the advantage is smaller than it used to be.
National Insurance Sits on Top
National Insurance contributions are deducted from the same pay cheque as income tax but are a separate charge with their own thresholds. For 2026/27, employees pay 8% on earnings between the Primary Threshold and the Upper Earnings Limit, and 2% on anything above that. Your employer pays an additional percentage on top of your salary, which doesn’t appear on your payslip but affects the total cost of employing you.
Together, income tax and NICs determine your real take-home pay. Someone in the basic rate band paying 20% income tax and 8% NICs keeps 72p of each extra pound earned, not 80p. Looking at income tax bands alone understates what actually comes out of your wages.