The 2025/26 tax year runs from 6 April 2025 to 5 April 2026. Understanding how the tax bands work is essential to knowing your take-home pay and whether you can take steps to reduce your tax bill.
Income Tax Bands for England, Wales and Northern Ireland
| Tax Band | Rate | Taxable Income |
|---|---|---|
| Personal Allowance | 0% | Up to £12,570 |
| Basic Rate | 20% | £12,571 to £50,270 |
| Higher Rate | 40% | £50,271 to £125,140 |
| Additional Rate | 45% | Over £125,140 |
The UK uses a progressive tax system. This means you only pay each rate on the portion of income that falls within that band — not on your entire salary.
Example: £60,000 salary
- First £12,570: £0 (personal allowance)
- £12,571 to £50,270 (£37,700): 20% = £7,540
- £50,271 to £60,000 (£9,730): 40% = £3,892
- Total income tax: £11,432
Scottish Income Tax Bands 2025/26
| Tax Band | Rate | Taxable Income |
|---|---|---|
| Personal Allowance | 0% | Up to £12,570 |
| Starter Rate | 19% | £12,571 to £15,397 |
| Basic Rate | 20% | £15,398 to £27,491 |
| Intermediate Rate | 21% | £27,492 to £43,662 |
| Higher Rate | 42% | £43,663 to £75,000 |
| Advanced Rate | 45% | £75,001 to £125,140 |
| Top Rate | 48% | Over £125,140 |
Scottish taxpayers pay slightly less tax on lower earnings (due to the 19% starter rate), but significantly more on higher incomes due to the 42% higher rate and the earlier thresholds.
The Personal Allowance Trap
If you earn between £100,000 and £125,140, you face an effective marginal tax rate of 60%. This is because your personal allowance reduces by £1 for every £2 you earn over £100,000. Combined with the 40% income tax rate, this creates a 60% effective rate in this income range.
The solution for many people in this bracket is to make pension contributions — either via salary sacrifice or personal contributions — to bring their taxable income below £100,000.