UK Tax Year 2026/27: Complete Guide
The 2026/27 tax year runs from 6 April 2026 to 5 April 2027. This guide covers all the rates and thresholds you need to know as an employee, self-employed worker, or contractor in the UK.
Whether you are starting a new job, negotiating a pay rise, or simply want to understand your payslip, knowing the current tax rates is essential. Below you will find every major threshold for income tax, National Insurance, student loans, and workplace pensions, together with worked examples that show exactly how much you will take home in the 2026/27 tax year.
Income Tax Rates: England, Wales & Northern Ireland
The income tax bands for England, Wales, and Northern Ireland remain frozen at the same levels as previous years, as part of the government's threshold freeze extending to April 2028 (and subsequently to April 2031).
| Band | Taxable Income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 – £50,270 | 20% |
| Higher Rate | £50,271 – £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
Because the Personal Allowance and higher-rate threshold have been frozen since 2021/22, wage growth has steadily pulled more people into higher tax bands, a process known as fiscal drag. In practical terms, if your salary has risen from £48,000 to £52,000 over the past few years, you are now paying 40% on the portion above £50,270, even though your purchasing power may not have increased in real terms. You can see the precise impact on your pay by using our income tax calculator.
Worked Example: £35,000 Salary
Consider an employee on a gross salary of £35,000 with the standard 1257L tax code and no other taxable benefits:
- The first £12,570 is covered by the Personal Allowance, so £0 tax.
- The remaining £22,430 (£35,000 minus £12,570) falls in the basic-rate band at 20%, giving £4,486 tax.
- Total income tax for the year: £4,486.
After National Insurance (covered below), this employee would take home approximately £28,718 per year, or around £2,393 per month. You can verify this figure with our take-home pay calculator.
Worked Example: £60,000 Salary
For a salary of £60,000:
- Personal Allowance (£12,570): £0 tax.
- Basic rate on £37,700 (£12,571 to £50,270): £7,540.
- Higher rate on £9,730 (£50,271 to £60,000) at 40%: £3,892.
- Total income tax: £11,432.
This earner crosses the higher-rate threshold, which means every additional pound earned above £50,270 is taxed at 40% rather than 20%. If you are close to this boundary, making pension contributions via salary sacrifice can be a tax-efficient way to keep more of your income. See our pension contribution calculator to model different scenarios, or read the salary sacrifice guide for a full explanation.
Personal Allowance Taper
If your adjusted net income exceeds £100,000, your Personal Allowance is reduced by £1 for every £2 above that threshold. The allowance reaches zero at £125,140. This creates an effective 60% marginal tax rate between £100,000 and £125,140.
For someone earning exactly £110,000, the Personal Allowance is reduced by £5,000 (half of the £10,000 above £100,000), leaving an effective allowance of just £7,570. The extra tax on that lost allowance is £2,000 (£5,000 at 40%), which, combined with the 40% rate on the income itself, produces an overall marginal rate of 60% on earnings between £100,000 and £125,140.
If you are in this income range, strategies such as increasing pension contributions or donating to charity through Gift Aid can reduce your adjusted net income below £100,000 and restore the full Personal Allowance. Use our salary calculator to see how the taper affects your take-home pay.
Scottish Income Tax Rates 2026/27
Scotland sets its own income tax rates. For 2026/27, the bands are:
| Band | Taxable Income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Starter Rate | £12,571 – £16,537 | 19% |
| Basic Rate | £16,538 – £29,526 | 20% |
| Intermediate Rate | £29,527 – £43,662 | 21% |
| Higher Rate | £43,663 – £75,000 | 42% |
| Advanced Rate | £75,001 – £125,140 | 45% |
| Top Rate | Over £125,140 | 48% |
The Personal Allowance is set by the UK government and applies equally in Scotland. Only the tax rates and non-savings, non-dividend income bands differ.
How Scottish Tax Compares to the Rest of the UK
Scottish taxpayers earning below roughly £28,500 pay slightly less income tax than their counterparts in England and Wales, thanks to the 19% starter-rate band. However, above that level the picture reverses. A Scottish taxpayer on £50,000 pays more income tax than an English or Welsh taxpayer on the same salary because the intermediate rate of 21% and the higher rate of 42% both exceed the equivalent rUK rates. At £75,000 the difference widens further with the 45% advanced rate applying.
If you live in Scotland, make sure you select the Scottish tax option in our salary calculator for accurate results. Your tax code will begin with an "S" (e.g. S1257L), which tells your employer to apply Scottish rates. For a deeper look at how income tax bands work across the UK, see our income tax bands explained guide.
National Insurance Contributions 2026/27
Employee (Class 1) National Insurance contributions for 2026/27:
| Earnings | Rate |
|---|---|
| Below £12,570 (Primary Threshold) | 0% |
| £12,570 – £50,270 (Upper Earnings Limit) | 8% |
| Above £50,270 | 2% |
The Lower Earnings Limit (LEL) is £6,708. Earnings between the LEL and Primary Threshold don't attract NI but do qualify you for state pension credits.
Employer National Insurance
From April 2025 the employer NI rate increased to 15%, with the Secondary Threshold reduced to £5,000. This means employers pay 15% on every pound of an employee's earnings above £5,000. While this is not deducted from your pay, it affects your total employment cost and may influence salary negotiations. The Employment Allowance (£10,500 for eligible employers) can offset some of this cost for smaller businesses.
Worked Example: NI on a £35,000 Salary
For our £35,000 earner:
- Earnings up to £12,570: £0 NI.
- Earnings from £12,570 to £35,000 = £22,430 at 8%: £1,794.40.
- Total employee NI: £1,794.40 per year, or roughly £149.53 per month.
Combined with £4,486 income tax, total deductions (before pension) come to £6,280.40, leaving take-home pay of approximately £28,719.60. Calculate your NI contributions using our dedicated tool.
What Changed from 2025/26
The employee NI rate of 8% and the Primary Threshold of £12,570 remain unchanged from 2025/26. However, for employers, the secondary threshold stays at the reduced level of £5,000, continuing the increased cost introduced in the previous year. Read our full National Insurance explained guide for more context on how NI works alongside income tax.
Student Loan Repayment Thresholds 2026/27
Student loan repayments are deducted through PAYE once your earnings exceed your plan's threshold:
| Plan | Annual Threshold | Rate |
|---|---|---|
| Plan 1 | £26,900 | 9% |
| Plan 2 | £29,385 | 9% |
| Plan 4 (Scotland) | £33,795 | 9% |
| Plan 5 | £25,000 | 9% |
| Postgraduate Loan | £21,000 | 6% |
Repayments are calculated on earnings above the threshold. If you have both an undergraduate and postgraduate loan, both are deducted simultaneously.
Worked Example: Plan 2 Student Loan on £35,000
An employee earning £35,000 with a Plan 2 student loan would repay:
- Earnings above threshold: £35,000 minus £29,385 = £5,615.
- Repayment at 9%: £5,615 × 0.09 = £505.35 per year, or roughly £42.11 per month.
This is deducted automatically through your payslip alongside tax and NI. When combined with the earlier deductions, our £35,000 earner with a Plan 2 loan takes home approximately £28,214 per year. Use our student loan repayment calculator to model your own situation, or read the student loan repayment guide for a thorough overview of all plan types.
Plan 5: What You Need to Know
Plan 5 applies to students who started undergraduate courses in England from September 2023 onwards. It has a lower repayment threshold of £25,000 but a longer repayment period of 40 years (compared to 30 years for Plan 2). If you are on Plan 5, you will start repaying sooner than a Plan 2 borrower, but the extended term means monthly payments are spread over a longer period. In practice, a graduate earning £35,000 on Plan 5 would repay £900 per year (£35,000 minus £25,000 = £10,000 × 9%), which is notably more than the £505 a Plan 2 borrower would repay on the same salary.
Pension Auto-Enrolment 2026/27
Under auto-enrolment, the minimum pension contributions on qualifying earnings (between £6,240 and £50,270) are:
| Contributor | Minimum Rate |
|---|---|
| Employee | 5% |
| Employer | 3% |
| Total | 8% |
Many employers calculate pension on full salary rather than just qualifying earnings. The auto-enrolment earnings trigger remains at £10,000.
Salary Sacrifice vs Relief at Source
How your pension contribution is made matters for your take-home pay. With salary sacrifice, your contractual salary is reduced before tax and NI are calculated, saving you both income tax and National Insurance. With relief at source, contributions are taken from your net pay, and the pension provider claims basic-rate tax relief (20%) on your behalf; higher-rate taxpayers must claim the additional relief through self-assessment.
For example, a £60,000 earner making a 5% salary sacrifice pension contribution (£3,000) would reduce their taxable income to £57,000. This saves £600 in income tax (at 40%) and £240 in NI (at 8%), for a total saving of £840 compared to receiving the £3,000 as cash and contributing after tax. See our pension contribution calculator to model your exact savings, and read the salary sacrifice guide for a detailed walkthrough.
Annual Allowance
The annual allowance for pension contributions in 2026/27 is £60,000. You can contribute up to this amount (or 100% of your earnings, whichever is lower) and receive tax relief. If you have unused allowance from the previous three tax years, you may be able to carry it forward to make larger contributions. However, high earners with adjusted income above £260,000 see their annual allowance tapered down to a minimum of £10,000.
Key Tax Codes for 2026/27
- 1257L: Standard tax code for most employees (£12,570 personal allowance)
- S1257L: Scottish equivalent of 1257L
- C1257L: Welsh equivalent of 1257L
- BR: All income taxed at basic rate (20%), typically used for second jobs
- D0: All income taxed at higher rate (40%)
- 0T: No personal allowance (used when allowance is fully used elsewhere)
- K codes: You owe more tax than your allowance covers (e.g., company car benefit)
- NT: No tax deducted
Understanding Your Tax Code
Your tax code tells your employer how much tax-free income you are entitled to. The number in your code is multiplied by 10 to give your allowance; so 1257L means a £12,570 allowance. If you have taxable benefits such as a company car, private medical insurance, or untaxed income, HMRC will adjust your code downwards. You should receive a coding notice (P2) each year explaining the calculation. If you believe your code is wrong, contact HMRC promptly, as an incorrect code means you will over- or under-pay tax throughout the year.
If you work two jobs, your Personal Allowance is usually applied to your main employment, and your second job uses a BR or D0 code. Our two jobs calculator can show you the combined take-home pay across both roles.
The Marriage Allowance
If one partner earns below the Personal Allowance (£12,570) and the other is a basic-rate taxpayer, you can transfer up to £1,260 of the unused allowance to the higher earner. This reduces the higher earner's tax bill by up to £252 per year (£1,260 at 20%). The transfer is not available if the recipient pays tax at the higher or additional rate. You can apply for the Marriage Allowance on gov.uk, and it can be backdated up to four years.
Dividend and Savings Allowances
For completeness, the 2026/27 tax year maintains the following allowances:
- Dividend Allowance: £500. Dividends up to this amount are tax-free. Above it, dividends are taxed at 8.75% (basic), 33.75% (higher), or 39.35% (additional).
- Personal Savings Allowance: £1,000 for basic-rate taxpayers, £500 for higher-rate taxpayers, and £0 for additional-rate taxpayers.
- Starting Rate for Savings: Up to £5,000 of savings income can be taxed at 0%, but only if your non-savings income is below £17,570 (the Personal Allowance plus £5,000).
These allowances are particularly relevant for self-employed individuals and company directors who receive a mix of salary and dividends.
Putting It All Together: Full Payslip Breakdown at £45,000
To illustrate how all these deductions interact, here is a complete breakdown for an employee earning £45,000 with a Plan 2 student loan and 5% employee pension contribution on qualifying earnings:
- Gross salary: £45,000
- Pension contribution (5% of qualifying earnings £6,240–£45,000 = £38,760 × 5%): £1,938
- Taxable pay (assuming relief at source): £45,000
- Income tax: £6,486 (£0 on first £12,570 + 20% on £32,430)
- Employee NI: £2,594.40 (8% on £32,430)
- Student loan (Plan 2): £1,405.35 (9% on £15,615)
- Total deductions: £12,423.75
- Net take-home pay: approximately £32,576 per year, or £2,715 per month
This example shows how tax, NI, student loan, and pension all stack up. Even at a reasonable salary of £45,000, total deductions can exceed 27% of gross pay. Try our salary calculator with your own figures to see your personalised breakdown.
Impact of the Frozen Thresholds
The decision to freeze income tax thresholds until at least April 2028 (and potentially to 2030/31) is the single most significant policy affecting take-home pay in the 2026/27 tax year. With average earnings rising by 3–5% annually, hundreds of thousands of workers are being brought into higher tax bands each year without any change to the headline rates.
For example, someone earning £49,000 in 2021/22 was comfortably within the basic-rate band. If their salary has grown to £53,000 by 2026/27, they now pay 40% on £2,730 of their income, an extra £546 in tax that they would not have owed had thresholds risen with inflation. Over five years of frozen thresholds, the cumulative impact can run into thousands of pounds.
If you are affected and want to explore ways to reduce your tax burden legitimately, consider increasing pension contributions, using the pension calculator, or reviewing whether you are claiming all available reliefs.
Important Dates
- 6 April 2026: 2026/27 tax year starts
- 5 April 2027: 2026/27 tax year ends
- 31 July 2027: Second payment on account deadline (2025/26)
- 5 October 2027: Deadline to register for self-assessment (if new)
- 31 October 2027: Paper self-assessment deadline
- 31 January 2028: Online self-assessment deadline for 2026/27
Missing these deadlines can result in automatic penalties. The initial late filing penalty for self-assessment is £100, and further penalties accrue at three, six, and twelve months. If you are unsure whether you need to file a self-assessment return, read HMRC's guidance or speak to an accountant. Our guide to how PAYE works explains the difference between PAYE and self-assessment and when each applies.
Sources
All figures in this guide are from official HMRC and gov.uk publications:
