UK Tax Rates 2025-2026: Complete Guide
A comprehensive overview of all UK tax rates, National Insurance contributions, student loan thresholds, and allowances for the 2025-2026 tax year (6 April 2025 to 5 April 2026).
The UK tax system for 2025-2026 continues with the same structure as previous years, with income tax bands, National Insurance contributions, and student loan thresholds remaining frozen. Understanding these rates is essential for calculating your take-home pay and planning your finances effectively.
This guide provides a complete breakdown of all tax rates, thresholds, and allowances that apply during the 2025-2026 tax year. Whether you're an employee, self-employed, or employer, you'll find all the key figures you need to understand your tax obligations.
Income Tax Rates (England, Wales & Northern Ireland)
Income tax in England, Wales, and Northern Ireland follows a progressive four-band system. You pay different rates on different portions of your income, not a single rate on your entire salary. The rates apply to your taxable income after deducting your personal allowance and any other allowances or reliefs.
| Band | Income Range | Tax Rate | Tax on Band |
|---|---|---|---|
| Personal Allowance | £0 - £12,570 | 0% | £0 |
| Basic Rate | £12,571 - £50,270 | 20% | £7,539.8 |
| Higher Rate | £50,271 - £125,140 | 40% | £29,947.6 |
| Additional Rate | £125,140 - No limit | 45% | Unlimited |
How Income Tax Works: Example
Let's say you earn £60,000 per year. Here's how your income tax is calculated:
- £0 - £12,570: Personal Allowance - 0% = £0
- £12,571 - £50,270: Basic Rate - 20% of £37,700 = £7,540
- £50,271 - £60,000: Higher Rate - 40% of £9,730 = £3,892
- Total Income Tax: £11,432 (19.1% effective rate)
Scottish Income Tax Rates
Scotland has a unique six-band income tax system with different rates and thresholds compared to the rest of the UK. Scottish taxpayers are identified by an 'S' prefix on their tax code. While the personal allowance remains the same at £12,570, the bands and rates above this differ significantly.
| Band | Income Range | Tax Rate | Difference from rUK |
|---|---|---|---|
| Personal Allowance | £0 - £12,570 | 0% | Same |
| Starter Rate | £12,571 - £14,876 | 19% | -1% |
| Basic Rate | £14,877 - £26,561 | 20% | Same |
| Intermediate Rate | £26,562 - £43,662 | 21% | +1% |
| Higher Rate | £43,663 - £75,000 | 42% | +2% |
| Advanced Rate | £75,001 - £125,140 | 45% | +5% |
| Top Rate | £125,140 - No limit | 48% | +3% |
National Insurance Contributions
National Insurance (NI) is a tax on earnings that helps fund state benefits including the NHS, state pension, and unemployment benefits. Unlike income tax, NI only applies to earned income (not investment income or pension income) and is calculated on a pay period basis rather than annually.
£1047.50 per month
On earnings £12,570 - £50,270
On earnings above £50,270
£416.67 per month
On all earnings above £5,000
Note: Employer NI doesn't affect your take-home pay but increases your total employment cost to your employer.
Student Loan Repayment Thresholds
Student loan repayments are automatically deducted from your salary once you earn above the threshold for your specific plan. The repayment rate and threshold vary depending on when and where you took out your loan. You may need to repay multiple loans if you have both undergraduate and postgraduate loans.
| Plan Type | Annual Threshold | Monthly Threshold | Repayment Rate |
|---|---|---|---|
| Plan 1 | £26,900 | £2241.67 | 9% |
| Plan 2 | £29,385 | £2448.75 | 9% |
| Plan 4 (Scotland) | £33,210 | £2767.50 | 9% |
| Plan 5 | £25,000 | £2083.33 | 9% |
| Postgraduate | £21,000 | £1750.00 | 6% |
Which Plan Am I On?
- Plan 1: Started university before September 2012 in England/Wales, or before 1998 in Scotland/Northern Ireland
- Plan 2: Started university between September 2012 and July 2023 in England/Wales
- Plan 4: Scottish student who started university after September 1998
- Plan 5: Started university on or after 1 August 2023 in England
- Postgraduate: Postgraduate loan for a master's or doctoral degree
Personal Allowance and Taper
The personal allowance is the amount of income you can earn each year before paying income tax. For 2025-2026, this is set at £12,570. However, if you earn over £100,000, your personal allowance reduces by £1 for every £2 earned above this threshold.
The 60% Tax Trap
Between £100,000 and £125,140, you effectively pay 60% tax on your income: 40% higher rate tax plus 20% from losing your personal allowance (£1 of allowance lost per £2 earned). This makes this income band the highest marginal tax rate in the UK system.
Personal Allowance Examples
Personal Allowance: £12,570 (full allowance)
Personal Allowance: £7,570 (reduced by £5,000)
Calculation: £12,570 - ((£110,000 - £100,000) / 2) = £7,570
Personal Allowance: £0 (completely tapered away)
Workplace Pension Contributions
Auto-enrolment workplace pensions require minimum contributions from both employees and employers. These contributions receive tax relief, making pensions one of the most tax-efficient ways to save for retirement. The qualifying earnings band determines the salary portion on which minimum contributions are calculated.
£6,240 - £50,270 per year
Minimum contributions only apply to earnings within this band
Tax Relief on Pension Contributions
Pension contributions receive tax relief at your marginal rate:
- Basic rate (20%): For every £100 contributed, you get £25 tax relief (£100 ÷ 0.8)
- Higher rate (40%): £100 contribution costs you £60 (additional relief claimed via tax return)
- Additional rate (45%): £100 contribution costs you £55
Calculate Your Take-Home Pay
Use our free salary calculator to see exactly how much you'll take home after tax, National Insurance, student loans, and pension contributions for the 2025-2026 tax year.
Calculate Your SalarySummary: Key Tax Figures for 2025-2026
The UK tax system for 2025-2026 maintains the freeze on tax thresholds that began in 2021-2022, meaning more people will be pulled into higher tax bands due to wage inflation. Here are the most important figures to remember:
Frequently Asked Questions
The 2025-2026 tax year runs from 6 April 2025 to 5 April 2026. The UK tax year always starts on 6 April, regardless of which day of the week it falls on.
No, tax rates and thresholds remain frozen at 2021-2022 levels as part of the government's fiscal policy. This freeze is currently set to continue until 2028. While rates haven't changed, wage inflation means more people are being pushed into higher tax bands ("fiscal drag").
It depends on the type of pension scheme. With salary sacrifice pensions, you don't pay National Insurance on the sacrificed amount. With relief-at-source pensions, you pay NI on the full salary but get income tax relief on contributions. Salary sacrifice is usually more tax-efficient.
Yes, if you have both an undergraduate loan and a postgraduate loan, you'll repay both simultaneously. Each has its own threshold and rate. For example, with Plan 2 and Postgraduate loans on a £35,000 salary, you'd repay 9% above £29,385 (Plan 2) plus 6% above £21,000 (Postgraduate).
Your marginal tax rate is the percentage of tax you pay on the next pound you earn. For example, if you earn £40,000, your marginal rate is 20% income tax + 8% NI = 28% (plus student loan repayments if applicable). Between £100,000-£125,140, the marginal rate reaches 60% due to the personal allowance taper.
Wales has the power to set its own income tax rates but currently uses the same rates as England. Welsh taxpayers have a 'C' prefix on their tax code. The Welsh Government can vary rates by up to 10 percentage points in either direction but has chosen not to do so for 2025-2026.