The UK tax bands haven't changed for 2025/26. What has changed is how many people fall into the higher rate bracket — because the thresholds have been frozen since 2021 while wages have risen. That's fiscal drag. And it's quietly moving hundreds of thousands of people into 40% tax.
The 2025/26 income tax bands
- £0 – £12,570 — Personal allowance. No tax.
- £12,571 – £50,270 — Basic rate. 20%.
- £50,271 – £125,140 — Higher rate. 40%.
- Above £125,140 — Additional rate. 45%.
These are the bands in England and Northern Ireland. Scotland has its own rates and bands, including a starter rate and intermediate rate that differ from the rest of the UK.
Marginal rate vs effective rate
This is where most people get confused. Your marginal rate is what you pay on your last pound of income. Your effective rate is your total tax as a percentage of your total income.
Example: £60,000 salary. You pay:
- 0% on the first £12,570 = £0
- 20% on £12,571–£50,270 = £7,540
- 40% on £50,271–£60,000 = £3,892
- Total: £11,432
Your marginal rate is 40%. Your effective rate is £11,432 ÷ £60,000 = 19%. Significantly lower. Understanding the difference stops people making bad decisions about pay rises and bonuses.
The £100,000 trap
At £100,000, your personal allowance starts reducing — £1 for every £2 earned above £100,000. By £125,140 it's gone entirely. In this range, your effective marginal rate is 60%.
That's not a mistake. Forty percent income tax, plus losing 20p of tax-free allowance on every extra pound. Many people in this bracket make pension contributions to bring their adjusted income below £100,000 — legally reducing their tax bill by thousands.
Remember: you also pay National Insurance
Income tax is not your only deduction. Employees also pay National Insurance — 8% on earnings between £12,570 and £50,270, and 2% above that. On a £50,000 salary, NI adds roughly £3,000 to your annual tax bill on top of income tax.
Use the salary calculator to see your full take-home — income tax, NI, student loan, and pension all calculated together in one place.