The 2026/27 tax year runs from 6 April 2026 to 5 April 2027. 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.
What Changed for 2026/27?
For England, Wales and Northern Ireland, nothing did. The personal allowance stays at £12,570, the basic rate limit at £37,700 and the additional rate threshold at £125,140 — all frozen until April 2031. Employee National Insurance is also unchanged at 8% and 2%.
Two things did move. Scotland raised its starter and basic rate thresholds by 7.4%, and every student loan repayment threshold was uprated — Plan 2 for the first time since 2023.
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 2026/27
| Tax Band | Rate | Taxable Income |
|---|---|---|
| Personal Allowance | 0% | Up to £12,570 |
| Starter Rate | 19% | £12,571 to £16,537 |
| Basic Rate | 20% | £16,538 to £29,526 |
| Intermediate Rate | 21% | £29,527 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 more on higher incomes due to the 42% higher rate and the earlier thresholds. The crossover point for 2026/27 is around £33,500 — below that you pay less in Scotland, above it you pay more.
Student Loan Thresholds 2026/27
- Plan 1: 9% above £26,900
- Plan 2: 9% above £29,385
- Plan 4 (Scotland): 9% above £33,795
- Plan 5: 9% above £25,000
- Postgraduate: 6% above £21,000
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. In Scotland, where the advanced rate is 45%, the same taper produces an effective 67.5%.
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.