How UK Income Tax bands and rates work
In England, Wales, and Northern Ireland, UK Income Tax is charged on taxable income above the Personal Allowance (currently 12,570 pounds). Income falling between 12,570 and 50,270 pounds is taxed at the basic rate of 20%.
Earnings between 50,270 and 125,140 pounds fall into the higher rate band and are taxed at 40%. Any taxable income exceeding 125,140 pounds is taxed at the additional rate of 45%.
Income tax is progressive, meaning you only pay the higher rates on the portion of your income that falls within each specific threshold slice.
Personal Allowance and the 100,000 pound taper
The standard tax-free Personal Allowance is 12,570 pounds. However, under Section 35 of the Income Tax Act 2007, this allowance tapers away once your adjusted net income exceeds 100,000 pounds.
Your Personal Allowance is reduced by 1 pound for every 2 pounds of adjusted net income over 100,000 pounds. Once your earnings reach 125,140 pounds, your Personal Allowance is completely eliminated.
This reduction creates an effective marginal tax rate of 60% on income between 100,000 and 125,140 pounds (40% income tax plus 20% lost allowance tax relief).
Differences between Scottish and standard UK tax rates
The Scottish Parliament sets devolved income tax rates and bands for Scottish residents. Scotland uses six tax bands: starter (19%), basic (20%), intermediate (21%), higher (42%), advanced (45%), and top rate (48%).
Because the higher rate threshold in Scotland applies at a lower income level than in the rest of the UK, higher earners residing in Scotland typically pay more income tax than their counterparts in England, Wales, or Northern Ireland.
Worked example: 45,000 pound salary
Consider an employee in England earning 45,000 pounds with no additional pension deductions in the 2026/27 tax year:
1. Personal Allowance: The first 12,570 pounds of earnings is completely tax-free.
2. Taxable Income: 45,000 pounds minus 12,570 pounds leaves 32,430 pounds subject to tax.
3. Tax Calculation: 32,430 pounds falls entirely within the basic rate band and is taxed at 20%, resulting in 6,486.00 pounds annual tax due.
The employee pays 540.50 pounds per month in Income Tax, keeping 38,514.00 pounds after income tax with an effective tax rate of 14.41%.
How pension contributions reduce taxable income
Workplace and personal pension contributions made via net pay or relief at source reduce your taxable earnings. Contributing to a pension lowers your adjusted net income, which can keep your earnings below higher tax bands or preserve your tax-free Personal Allowance if you earn over 100,000 pounds.
Inputs for the tax calculator
Tax year
Select the UK tax year for statutory HMRC thresholds and band rates.
Gross income (per year)
Your total yearly earnings before tax, including base salary, regular bonuses, and overtime.
Where you pay income tax
Select Scotland if your main residence is in Scotland to apply Scottish income tax rates and bands.
Annual pension contributions
Total yearly pension contributions made before tax, reducing your taxable income.
CALCULATOR QUESTIONS
Tax calculator questions
What is the UK Personal Allowance?
The UK Personal Allowance is 12,570 pounds for the 2025/26 and 2026/27 tax years. This is the amount of income you can earn each year before you have to pay any Income Tax.
How does the 100,000 pound Personal Allowance reduction work?
For every 2 pounds you earn above 100,000 pounds, you lose 1 pound of your Personal Allowance. By the time your income reaches 125,140 pounds, your Personal Allowance is zero, creating a 60% effective marginal tax rate.
Why does Scotland have different income tax rates?
Under devolution legislation, the Scottish Parliament has the power to set its own income tax bands and rates for Scottish taxpayers, which currently includes six tax bands ranging from 19% to 48%.
How do pension contributions lower my tax?
Pension contributions made before tax reduce your taxable income, meaning you pay income tax on a smaller portion of your earnings and save at your marginal tax rate (20%, 40%, or 45%).
Does this calculation include National Insurance?
This calculator focuses specifically on UK Income Tax. To see your combined Income Tax and National Insurance deductions, use the Tax and NI calculator.