UK Income Tax Brackets 2025/26: Complete Guide to Rates & Allowances
Everything you need to know about UK income tax for 2025/26 — rates, allowances, thresholds and how to reduce your bill.
Income Tax in the UK for 2025/26: The Basics
Income tax is charged on most forms of income — salary, self-employment profits, rental income, pension income, and savings interest above your Personal Savings Allowance. The UK uses a banded system, meaning you only pay each rate on the portion of income that falls within that band, not on your entire income. Understanding how the bands work is the first step to managing your tax bill effectively.
UK Income Tax Rates 2025/26 (England, Wales & Northern Ireland)
| Band | Taxable Income | Tax Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 – £50,270 | 20% |
| Higher Rate | £50,271 – £125,140 | 40% |
| Additional Rate | Above £125,140 | 45% |
The Personal Allowance: £12,570
Your Personal Allowance is the amount you can earn before paying any income tax. For 2025/26 it remains at £12,570 — unchanged since 2021/22 as HMRC has frozen thresholds. The freeze means that as wages rise with inflation, more taxpayers are being pulled into higher bands — a process sometimes called "fiscal drag."
Important: Your Personal Allowance reduces by £1 for every £2 you earn above £100,000. At £125,140 it reaches zero entirely, meaning those earning between £100,000 and £125,140 face an effective marginal rate of 60% on that portion of income (40% income tax plus 20% lost allowance).
Scottish Income Tax Rates 2025/26
Scotland sets its own income tax rates and bands (though National Insurance remains the same UK-wide). Scottish taxpayers pay income tax under the Scottish Rate of Income Tax (SRIT), which differs meaningfully from England, Wales, and Northern Ireland.
| Band | Taxable Income | Tax Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Starter Rate | £12,571 – £15,397 | 19% |
| Basic Rate | £15,398 – £27,491 | 20% |
| Intermediate Rate | £27,492 – £43,662 | 21% |
| Higher Rate | £43,663 – £75,000 | 42% |
| Advanced Rate | £75,001 – £125,140 | 45% |
| Top Rate | Above £125,140 | 48% |
National Insurance in 2025/26
National Insurance (Class 1 employee contributions) is separate from income tax but taken from the same payslip. The rates for 2025/26 are 8% on earnings between £12,570 and £50,270, and 2% on earnings above £50,270. Despite the name, NI does not build up a personal pot — it funds current state benefits including the State Pension, NHS, and unemployment support.
How to Reduce Your Income Tax Bill
Pension contributions
Contributions to a registered pension scheme reduce your taxable income pound-for-pound. A higher-rate taxpayer paying £8,000 into a pension receives £2,000 in basic rate relief from HMRC directly, and can reclaim a further £2,000 via self-assessment — effectively funding a £10,000 pension contribution for just £6,000 out of pocket. Use your employer's salary sacrifice scheme where possible, as this also reduces your National Insurance bill.
Salary sacrifice
Beyond pensions, salary sacrifice applies to childcare vouchers (legacy scheme), cycle-to-work schemes, and electric vehicles. Each reduces your gross salary, lowering both income tax and NI in one move.
ISA contributions
Interest and investment gains inside a Stocks and Shares ISA or Cash ISA are entirely free of income tax and capital gains tax. The annual allowance is £20,000. This does not reduce your current tax bill but protects all future growth from tax permanently.
Gift Aid donations
Charitable donations made under Gift Aid allow the charity to reclaim basic rate tax on your donation. Higher and additional rate taxpayers can also claim the difference between their tax rate and the basic rate via self-assessment — a 40% taxpayer giving £800 can claim back £200 (the additional 20% relief on the £1,000 gross donation).
Common Mistakes to Avoid
- Not claiming the Marriage Allowance: If one partner earns below £12,570 and the other is a basic rate taxpayer, you can transfer £1,260 of allowance, saving up to £252 per year — and can backdate four years.
- Missing higher-rate pension relief: Basic rate relief is added automatically, but higher-rate taxpayers must claim the extra 20% via self-assessment. Many do not.
- Ignoring the £100,000 trap: Earning just over £100,000 triggers a 60% effective rate. A pension contribution can bring you back below the threshold and restore your full Personal Allowance.
- Forgetting to report savings interest: With interest rates rising, many savers now exceed the Personal Savings Allowance (£500 for higher-rate taxpayers, £1,000 for basic rate). Interest above this is taxable and must be declared.
Use our Income Tax Calculator to see your exact 2025/26 tax breakdown →