How income tax is worked out
Income tax is charged on your income above your Personal Allowance. For 2026/27 the allowance is £12,570 for most people. The income above it is split into bands, and each band is taxed at its own rate, so moving into a higher band only affects the pounds inside that band, never your whole salary.
If you are an employee, your employer deducts tax through PAYE using your tax code (usually 1257L) and spreads it across the year. National Insurance is a separate deduction with its own thresholds. Your take-home pay is gross pay minus income tax, National Insurance, any student loan repayments and any pension contributions.
A pay rise can never reduce your take-home pay through income tax bands alone. Only the extra pounds are taxed at the higher rate. The exception to watch is the £100,000–£125,140 range, explained below.
Income tax bands 2026/27: England, Wales and Northern Ireland
Wales uses the same rates as England for 2026/27. Northern Ireland also follows the England rates for income tax.
| Band | Taxable income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
Scottish income tax bands 2026/27
If you live in Scotland, you pay Scottish income tax on earnings (your tax code starts with S). Savings and dividend income are still taxed at the UK rates. National Insurance is the same across the whole UK.
| Band | Income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Starter | £12,571 to £16,537 | 19% |
| Basic | £16,538 to £29,526 | 20% |
| Intermediate | £29,527 to £43,662 | 21% |
| Higher | £43,663 to £75,000 | 42% |
| Advanced | £75,001 to £125,140 | 45% |
| Top | Over £125,140 | 48% |
National Insurance for employees
Employees pay Class 1 National Insurance of 8% on earnings between £12,570 and £50,270 a year, and 2% on everything above £50,270. It is worked out per pay period, so if your pay varies month to month the annual total can differ slightly from the figures here.
Employers pay their own National Insurance on top of your salary. That does not come out of your pay, but it matters if you are budgeting for staff — see our payroll calculator.
Take-home pay table 2026/27 (England, Wales and NI)
Figures assume tax code 1257L, no pension contributions, no student loan and no other income. "All deductions" shows income tax plus National Insurance as a share of gross pay.
| Salary | Income tax | NI | Take-home / year | Per month | All deductions |
|---|---|---|---|---|---|
| £20,000 | £1,486 | £594 | £17,920 | £1,493 | 10.4% |
| £25,000 | £2,486 | £994 | £21,520 | £1,793 | 13.9% |
| £30,000 | £3,486 | £1,394 | £25,120 | £2,093 | 16.3% |
| £35,000 | £4,486 | £1,794 | £28,720 | £2,393 | 17.9% |
| £40,000 | £5,486 | £2,194 | £32,320 | £2,693 | 19.2% |
| £50,000 | £7,486 | £2,994 | £39,520 | £3,293 | 21.0% |
| £60,000 | £11,432 | £3,211 | £45,357 | £3,780 | 24.4% |
| £75,000 | £17,432 | £3,511 | £54,057 | £4,505 | 27.9% |
| £100,000 | £27,432 | £4,011 | £68,557 | £5,713 | 31.4% |
| £150,000 | £53,703 | £5,011 | £91,286 | £7,607 | 39.1% |
Scotland vs England: who takes home more?
Scotland's 19% starter band makes lower salaries very slightly better off, but the 21% intermediate rate and the 42% higher rate (which starts at £43,663 instead of £50,271) mean Scottish taxpayers take home less from about £33,500 upwards. At £50,000 the gap is £1,496 a year; at £100,000 it is £3,300.
| Salary | England / Wales / NI | Scotland | Scotland difference |
|---|---|---|---|
| £25,000 | £21,520 | £21,559 | +£40 |
| £30,000 | £25,120 | £25,155 | +£35 |
| £35,000 | £28,720 | £28,705 | −£15 |
| £40,000 | £32,320 | £32,255 | −£65 |
| £50,000 | £39,520 | £38,024 | −£1,496 |
| £60,000 | £45,357 | £43,607 | −£1,750 |
| £75,000 | £54,057 | £52,007 | −£2,050 |
| £100,000 | £68,557 | £65,257 | −£3,300 |
The £100,000 tax trap (62% marginal rate)
Once your adjusted net income goes over £100,000, your Personal Allowance is cut by £1 for every £2 above the limit. By £125,140 it has gone completely. In this range each extra £1 costs 40% higher-rate tax, plus another 20% because £0.50 of allowance is lost, plus 2% National Insurance — a 62% marginal rate in England, Wales and NI.
In practice, a rise from £100,000 to £125,140 (an extra £25,140) adds only £9,553 to take-home pay.
| Salary | Personal Allowance left | Take-home | Marginal rate |
|---|---|---|---|
| £90,000 | £12,570 | £62,757 | 42% |
| £100,000 | £12,570 | £68,557 | 42% |
| £105,000 | £10,070 | £70,457 | 62% |
| £110,000 | £7,570 | £72,357 | 62% |
| £120,000 | £2,570 | £76,157 | 62% |
| £125,140 | £0 | £78,111 | 42% |
| £130,000 | £0 | £80,686 | 47% |
On £110,000 your take-home is £72,357 and you keep only £7,570 of Personal Allowance. Sacrificing £10,000 into a pension brings your income back to £100,000, restores the full allowance and cuts take-home to £68,557. So £10,000 goes into your pension for a take-home cost of just £3,800. Check your scheme rules first, because not every employer offers salary sacrifice.
Dividends and savings in 2026/27
Dividends have a £500 tax-free allowance. Above that, dividend rates for 2026/27 are 10.75% (basic rate), 35.75% (higher rate) and 39.35% (additional rate). There is also a 0% starting rate for savings of up to £5,000, which only helps people whose other income is low.
Working from an hourly rate or a payslip
If you are paid by the hour, convert to an annual figure first: hourly rate × paid hours per week × 52. Our hourly-to-salary calculator does this and also shows monthly and weekly pay. For a full payslip breakdown with different pay frequencies, use the paycheck calculator.
Frequently asked questions
What is the tax-free Personal Allowance for 2026/27?
£12,570. It is reduced by £1 for every £2 of adjusted net income above £100,000, so it is zero once income reaches £125,140.
At what salary do I start paying 40% tax in 2026/27?
In England, Wales and Northern Ireland the 40% higher rate starts on income above £50,270. In Scotland the 42% higher rate starts above £43,662.
How much is take-home pay on £30,000 in 2026/27?
About £25,120 a year (£2,093 a month) in England, Wales and NI with no pension or student loan, and £25,155 in Scotland.
Is National Insurance different in Scotland?
No. National Insurance rates and thresholds are the same across the UK: 8% between £12,570 and £50,270 and 2% above that for employees.
Why is my marginal tax rate 62% between £100,000 and £125,140?
Because you pay 40% tax on the extra £1 and also lose 50p of Personal Allowance, which adds another 20p of tax, plus 2% National Insurance.
Official sources
- GOV.UK — Income Tax rates and allowances: current and past
- Scottish Government — Scottish Income Tax rates and bands 2026 to 2027
- GOV.UK — National Insurance rates and categories
- GOV.UK — Income Tax in Scotland
Rates checked against these sources on 30 October 2026. Tables are calculated with the same engines as our calculators. This guide is general information, not tax advice.
About the author: Ahmed Bilal
Ahmed Bilal is the founder of VolexTool and builds and maintains every calculator on the site. Tax rates and thresholds are taken directly from official sources such as GOV.UK, HMRC, the Canada Revenue Agency and the Australian Taxation Office, the formula is shown on every page, and each update must pass more than 600 automated checks before it goes live. Ahmed is not a tax adviser: for decisions about your own situation, speak to a qualified accountant or financial adviser.