See exactly how your income splits across tax bands — with a visual breakdown.
| Band | Income in Band | Rate | Tax |
|---|---|---|---|
| Personal Allowance | — | 0% | £0 |
| Basic Rate | — | 20% | — |
| Higher Rate | — | 40% | — |
| Total Income Tax | — | ||
Income tax is charged on a marginal basis — you pay each rate only on the slice of income that falls within that band. Crossing into the higher-rate band does not mean paying 40% on your entire salary; it means paying 40% only on the earnings above £50,270.
If your income exceeds £100,000, your personal allowance is withdrawn at £1 for every £2 above £100,000. At £125,140 the allowance is fully gone. This creates an effective 60% marginal rate in the £100,000–£125,140 range — making pension contributions especially valuable for earners in this band.
The UK income tax system for 2026/27 uses a tiered band structure where different slices of your income are taxed at progressively higher rates. The first £12,570 (the Personal Allowance) is tax-free — a benefit available to all UK taxpayers up to £100,000 of income, after which it tapers away by £1 for every £2 of income (fully removed at £125,140).
The basic rate of 20% applies to taxable income between £12,571 and £50,270, covering most UK workers. Above £50,270, the higher rate of 40% kicks in until £125,140, and the additional rate of 45% applies above that. Critically, only the slice within each band is taxed at that rate — earning £60,000 doesn't mean you pay 40% on the whole salary; you pay 0% on the first £12,570, 20% on the next £37,700, and 40% only on the £9,730 above £50,270.
National Insurance for employees is calculated separately: 8% on earnings between £12,570 and £50,270, and 2% on earnings above £50,270. Combining tax and NI, the marginal rate (what each extra pound costs in deductions) is 28p in the basic-rate band, 42p in the higher-rate band, 62p in the £100k-£125,140 taper zone (due to the disappearing Personal Allowance), and 47p above £125,140. Pension contributions reduce taxable income at your marginal rate — the most efficient use of pension sacrifice is in the 62p taper zone, where each £1,000 contributed saves approximately £620 of tax and NI.
For the 2026/27 tax year, key allowances and thresholds you should know: the Personal Savings Allowance (£1,000 for basic-rate, £500 for higher-rate, £0 for additional-rate taxpayers), the Dividend Allowance (£500), and the Capital Gains Tax annual exempt amount (£3,000). The Marriage Allowance lets you transfer £1,260 of unused Personal Allowance to a basic-rate-paying partner, worth up to £252/year. Bonuses, overtime, and irregular income are all taxed at your marginal rate via PAYE, so a higher-rate payslip can produce a noticeable shock to take-home in months you earn extra.