How UK Income Tax works
Income Tax is charged on most kinds of income: wages, self-employed profits, pensions (including the State Pension), rental profits and some benefits. It is a marginal tax, meaning each rate only applies to the slice of income within its band. Moving into the higher-rate band does not make all of your income taxed at 40% – only the pounds above the threshold. This calculator splits your income into bands so you can see exactly where each pound falls for the 2026/27 tax year. Rates are taken from GOV.UK Income Tax rates and GOV.UK Scottish Income Tax.
2026/27 rates in England, Wales and Northern Ireland
| 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% |
Welsh taxpayers technically pay Welsh rates of Income Tax, but these are currently set so the total matches England and Northern Ireland.
2026/27 Scottish Income Tax
| Band | Taxable income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Starter rate | £12,571 to £16,537 | 19% |
| Basic rate | £16,538 to £29,526 | 20% |
| Intermediate rate | £29,527 to £43,662 | 21% |
| Higher rate | £43,663 to £75,000 | 42% |
| Advanced rate | £75,001 to £125,140 | 45% |
| Top rate | Over £125,140 | 48% |
Scottish rates apply to earnings, pensions and rental income. Savings interest and dividends are taxed using UK-wide rates wherever you live.
The Personal Allowance taper
Once your adjusted net income exceeds £100,000, you lose £1 of Personal Allowance for every £2 above that level. Someone earning £110,000 therefore has a Personal Allowance of £7,570. Because each extra £2 of income both attracts 40% tax and pulls £1 of previously tax-free income into the 40% band, the effective marginal rate in this zone is 60% (plus National Insurance for employees). Pension contributions and Gift Aid donations reduce adjusted net income and can restore some or all of the allowance – which is why this income range is a common focus of financial planning.
How the calculation works – step by step
- Start with your total taxable income for the year.
- Work out your Personal Allowance, applying the taper above £100,000.
- Subtract the allowance to get taxable income.
- Fill each band in order, multiplying the slice in each band by its rate.
- Add the slices together to get your total Income Tax.
Example: on £60,000 in England, £12,570 is tax-free, the next £37,700 is taxed at 20% (£7,540) and the remaining £9,730 at 40% (£3,892), giving £11,432 in total. Your average tax rate is therefore 19.1%, even though your marginal rate is 40%.
Average rate vs marginal rate
Two numbers matter when you think about tax. The average (or effective) rate tells you what share of your whole income goes in tax and is useful for budgeting. The marginal rate tells you how much of your next pound you keep, which matters for decisions such as accepting a pay rise, working extra hours or making a pension contribution. The calculator shows both.
Income that has its own allowances
- Savings interest – the Personal Savings Allowance lets basic-rate taxpayers earn £1,000 of interest tax-free (£500 for higher-rate taxpayers, nothing for additional-rate). Some people also qualify for the starting rate for savings.
- Dividends – a separate dividend allowance and dividend tax rates apply.
- Trading and property allowances – the first £1,000 of income from each can be tax-free.
- ISAs – income and gains inside an ISA are not taxed at all.
This calculator focuses on non-savings, non-dividend income such as wages and pensions. If you have significant savings or dividend income, the order in which income is taxed becomes more complex, and HMRC's Self Assessment calculation is the final word.
Do I need to file a tax return?
Most employees and pensioners pay tax automatically through PAYE and never need to file. You usually need Self Assessment if you are self-employed with income over £1,000, have untaxed income such as rent, receive income over £150,000 (check current HMRC guidance), or need to pay the High Income Child Benefit Charge. GOV.UK has a short checker that tells you whether you need to register.
Figures are estimates for guidance and assume a standard Personal Allowance. They are not tax advice.