💰 Income Tax Calculator
Tax Breakdown
Understanding UK Income Tax 2025/26
Income tax is the UK government's single largest source of revenue, raising over £250 billion per year. It applies to most types of income including employment earnings, self-employment profits, pensions, rental income, and savings interest above your personal savings allowance.
The UK uses a progressive tax system, meaning you pay different rates on different portions of your income. You do not pay 40% on all your income just because you are a higher-rate taxpayer — you only pay 40% on the portion above the basic rate threshold.
2025/26 Tax Bands — England, Wales & Northern Ireland
| Band | Income Range | Rate | Tax on Full Band |
|---|---|---|---|
| Personal Allowance | £0 – £12,570 | 0% | £0 |
| Basic Rate | £12,571 – £50,270 | 20% | £7,540 |
| Higher Rate | £50,271 – £125,140 | 40% | £29,948 |
| Additional Rate | Over £125,140 | 45% | Variable |
The 60% Tax Trap (£100,000 – £125,140)
One of the most important things for higher earners to understand is the personal allowance taper. Once your income exceeds £100,000, your £12,570 personal allowance is reduced by £1 for every £2 of income above £100,000. This means:
- At £100,000 income: full £12,570 allowance
- At £110,000 income: £7,570 allowance
- At £125,140 income: £0 allowance
This creates an effective 60% marginal tax rate on income between £100,000 and £125,140. For every additional £1 earned in this band, you pay 40p in income tax plus lose 50p of personal allowance (worth 20p in tax), totalling 60p.
Marriage Allowance
If you are married or in a civil partnership, and one partner earns less than £12,570, they can transfer up to £1,260 of their unused personal allowance to the higher-earning partner (who must be a basic-rate taxpayer). This saves up to £252 per year in tax. You can backdate claims for up to 4 years.
Blind Person's Allowance
If you are registered as severely sight-impaired (blind), you receive an additional tax-free allowance of £2,870 for 2025/26. This is added to your personal allowance, giving a total of £15,440. You can also transfer any unused portion to your spouse or civil partner.
Scottish Income Tax Rates 2025/26
Scotland has six income tax bands with rates ranging from 19% to 48%. The personal allowance is the same as the rest of the UK (£12,570), but the bands above it differ significantly. Scottish taxpayers generally pay slightly more tax on middle and higher incomes.
How to Reduce Your Income Tax Bill
- Pension contributions: Reduce your taxable income by contributing to a pension. Relief is given at your marginal rate.
- Marriage allowance: Transfer unused allowance to a basic-rate taxpayer spouse (saves £252/year).
- Gift Aid: Charitable donations extend your basic-rate band, potentially reducing your marginal rate.
- ISAs: Investment returns within an ISA are completely tax-free.
- Salary sacrifice: Exchanging salary for benefits (pension, cycle-to-work, childcare) reduces your taxable income and NI liability.
- Personal savings allowance: Basic-rate taxpayers get £1,000 of tax-free savings interest; higher-rate taxpayers get £500.
Frequently Asked Questions
Personal Allowance: £0-£12,570 (0%). Basic Rate: £12,571-£50,270 (20%). Higher Rate: £50,271-£125,140 (40%). Additional Rate: over £125,140 (45%).
Between £100,000 and £125,140, your personal allowance is withdrawn (£1 for every £2 above £100k), creating an effective 60% marginal rate.
Transfer up to £1,260 of unused personal allowance to a basic-rate taxpayer spouse/civil partner. Saves up to £252/year.
£12,570. Frozen since 2021/22. Reduces by £1 for every £2 earned above £100,000.