UK Income Tax Calculator 2025-26

How UK income tax is calculated in 2025–26

For income tax specifically, there are no changes between 2024–25 and 2025–26. The threshold freeze means that as wages rise, more taxpayers are pulled into higher tax bands — a phenomenon known as fiscal drag.

UK income tax is calculated by deducting the personal allowance from your gross annual income to arrive at your taxable income, then applying progressively higher rates to each band. The tax is the same whether you earn from employment, self-employment, pensions, or rental income — though the collection mechanism differs (PAYE for employees, Self Assessment for the self-employed). National Insurance is a separate deduction and is not included in the income tax figures below.

The rates and bands

For 2025–26, England, Wales, and Northern Ireland taxpayers pay: 0% on the first £12,570 (personal allowance); 20% basic rate on income from £12,571 to £50,270; 40% higher rate on income from £50,271 to £125,140; 45% additional rate on income above £125,140. These thresholds have been frozen since 2021 and are confirmed frozen through April 2028.

Worked example: £35,000 salary

Personal allowance and the 60% tax trap

The personal allowance of £12,570 is the amount of income you receive free of income tax. It applies to most taxpayers in England, Wales, Northern Ireland, and Scotland. For high earners, the allowance tapers: above £100,000 it reduces by £1 for every £2 of income, reaching zero at £125,140. This creates an effective 60% marginal rate on income in the £100,000–£125,140 range — sometimes called the “60% tax trap”.

For example, a person earning £110,000 has lost £5,000 of personal allowance (half of the £10,000 excess above £100,000). Their personal allowance is £7,570 instead of £12,570, meaning an extra £5,000 of income is taxed at 40% — costing £2,000 in addition to the 40% tax on the original £10,000. The most common strategy to avoid this trap is making pension contributions that bring adjusted net income back below £100,000.

Threshold freeze and fiscal drag

The decision to freeze income tax thresholds through to April 2028 means that as wages rise with inflation, a growing share of income is subject to tax. Each year, some taxpayers cross the basic rate threshold for the first time, and some higher-rate taxpayers see more of their income taxed at 40%. This “fiscal drag” generates additional tax revenue without any formal change to rates. A bonus that pushes income above the higher rate threshold is taxed at 40% on the excess.

Scottish income tax

Scotland has separate income tax rates and bands, set annually by the Scottish Parliament. For 2025–26, Scottish taxpayers pay: 19% starter rate (£12,571–£14,876); 20% basic rate (£14,877–£26,561); 21% intermediate rate (£26,562–£43,662); 42% higher rate (£43,663–£75,000); 45% advanced rate (£75,001–£125,140); 48% top rate (above £125,140). The personal allowance (£12,570) and taper rules are UK-wide.

A Scottish taxpayer earning £50,000 pays approximately £700 more income tax than an equivalent English taxpayer on the same salary, primarily because the intermediate rate of 21% and higher rate of 42% apply at lower income levels.

What this calculator does not cover

This calculator covers income tax only — it does not include National Insurance, student loan repayments, pension deductions, or dividend tax. Capital gains are taxed separately at different rates. Contractors should check their IR35 status to understand how their contract income is taxed. For a complete after-tax figure, use the take-home pay calculator.

Sources: HMRC — Income Tax rates and allowances (gov.uk)