Work out your take-home pay
Income tax, National Insurance and net pay for any UK salary, 2026-27.
The standard personal allowance in the United Kingdom is £12,570, and income above it is taxed at 20% up to £50,270 before higher rates begin [1]. Around 84% of all UK income tax is collected before workers ever see the money, through Pay As You Earn deductions applied by employers [6]. The bands that govern those deductions are the backbone of the whole system, yet they are widely misunderstood.
Income tax is not a single flat charge. It is a stack of bands, each applying only to the slice of income that falls within it, so a person moving into a higher band pays the higher rate only on the part above the threshold, never on their whole salary [1]. Scotland runs its own set of bands, which means two people on identical salaries can owe different amounts depending on where they live [2].
This guide sets out the bands for the 2026-27 tax year in full: the main rates for England, Wales and Northern Ireland, the six Scottish bands, the effective 60% zone that catches higher earners, and the frozen thresholds quietly pulling more people into higher bands each year [9].
It is written for employers, payroll administrators and anyone who needs an accurate reference for how UK income tax is banded and applied.
Key takeaways
- The personal allowance is £12,570, taxed at 0%, before any income tax is due for the 2026-27 tax year [1].
- In England, Wales and Northern Ireland, income is taxed at 20%, then 40% above £50,270, then 45% above £125,140 [1].
- Scotland has six bands ranging from 19% to 48%, set separately by the Scottish Parliament [3].
- Between £100,000 and £125,140, the personal allowance is withdrawn, creating an effective marginal rate of 60% [9].
- Thresholds are frozen until at least the end of the 2027-28 tax year, so fiscal drag pulls more earners into higher bands over time [9].
The bands for England, Wales and Northern Ireland
Most UK taxpayers fall under the rest-of-UK bands, which cover England, Wales and Northern Ireland. Wales has the power to set its own rates but has so far matched the rest-of-UK figures [7]. Three rates apply above the personal allowance.
The three main rates and where they start
The table below shows the bands for the 2026-27 tax year. The figures in the middle column are total income, inclusive of the personal allowance, which is how most people think about their salary [1].
| Band | Total annual income | Rate |
|---|---|---|
| Personal allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | Above £125,140 | 45% |
The point where the higher rate begins, £50,270, is the same figure as the National Insurance upper earnings limit, which is why earnings around that level attract a distinctive mix of deductions [4]. Above £50,270, income tax rises to 40% while employee National Insurance drops to 2%, so the total marginal deduction changes shape rather than simply increasing [10].
How the personal allowance fits in
The personal allowance is the amount a person can earn before any income tax is charged, and for the standard case it is £12,570 [1]. It is delivered through the tax code: the common code 1257L represents £12,570 of allowance spread evenly across the year [5]. Because the allowance is built into the code, an employee on PAYE receives it automatically without claiming it [6].
Not everyone gets the full allowance. It can be reduced by unpaid tax from an earlier year, by taxable benefits in kind, or by high income, and it can be increased slightly by the Marriage Allowance where one partner transfers part of theirs [11]. Any business running its own payroll on an HMRC-recognised payroll platform applies whatever code HMRC issues, rather than deciding the allowance itself.
Scotland's separate system
Since income tax on earnings was partly devolved, Scotland has set its own bands and rates, and they differ markedly from the rest of the UK [2]. A Scottish taxpayer is identified by a tax code beginning with S, and the personal allowance of £12,570 still applies because the allowance itself is not devolved [2].
The six Scottish bands
Scotland uses six bands rather than three, adding a starter rate below the basic rate and an intermediate and advanced rate in the middle and upper reaches [3]. The rates for the 2026-27 tax year are shown below.
| Scottish band | Rate |
|---|---|
| Starter rate | 19% |
| Basic rate | 20% |
| Intermediate rate | 21% |
| Higher rate | 42% |
| Advanced rate | 45% |
| Top rate | 48% |
For the 2026-27 tax year, the thresholds for the starter and basic rate bands rose by 7.4%, while the higher, advanced and top rate thresholds stayed frozen [3]. The top rate of 48% is the highest headline income tax rate anywhere in the UK [3].
Where a Scottish taxpayer pays more or less
The extra bands mean the outcome depends on income level. Lower earners in Scotland can pay marginally less than their counterparts elsewhere in the UK because of the 19% starter rate, while middle and higher earners pay more, since the Scottish higher rate of 42% bites at a lower point than the rest-of-UK 40% [2]. The crossover sits at a relatively modest salary, which is why payroll teams operating across borders must apply the correct regional code to each employee [5]. Payroll bureaux handling clients on both sides of the border often manage this through a single multi-client payroll dashboard.
The bands most people miss
The headline bands are only part of the picture. Two features of the system create effective rates that do not appear in any table, and both catch higher earners in particular [9].
The 60% zone between £100,000 and £125,140
Once income passes £100,000, the personal allowance is withdrawn at a rate of £1 for every £2 of income above that level, disappearing entirely at £125,140 [9]. The effect is that each extra £100 of income in this band is taxed at 40% and also strips away £50 of allowance, which is itself then taxed. The result is an effective marginal rate of 60% on income between £100,000 and £125,140, higher than the 45% additional rate that applies above it [9].
This anomaly is not a formal band, which is why it surprises so many people. It sits hidden inside the interaction between the higher rate and the tapering allowance, and it is one of the strongest arguments for pension contributions or salary sacrifice among affected earners [1].
Frozen thresholds and fiscal drag
The personal allowance and the higher rate threshold have been held flat rather than rising with inflation, and the freeze runs until at least the end of the 2027-28 tax year [9]. As wages rise, more income is dragged into higher bands even though the rates themselves have not changed, a process known as fiscal drag [9]. A pay rise that merely matches inflation can therefore push an employee into the higher rate for the first time, increasing the tax taken without any real gain in spending power [9].
How the bands are actually applied
Knowing the bands is only useful alongside knowing how they are worked in practice. Two principles govern this: marginal taxation and the cumulative PAYE calculation [6].
Marginal, not average
A common misconception is that crossing into the higher rate taxes the whole salary at 40%. It does not. Each band applies only to the income that falls within it, so a person earning £60,000 pays 0% on the first £12,570, 20% on the next slice up to £50,270, and 40% only on the £9,730 above that [1]. The full breakdown is set out below.
| Slice of a £60,000 salary | Rate | Tax on the slice |
|---|---|---|
| First £12,570 (personal allowance) | 0% | £0 |
| £12,571 to £50,270 (£37,700) | 20% | £7,540 |
| £50,271 to £60,000 (£9,730) | 40% | £3,892 |
| Total | £11,432 |
Their average rate across the whole salary is around 19%, far below 40%, even though their marginal rate, the rate on the next pound earned, is 40% [1]. This distinction matters for anyone weighing a pay rise or an extra shift, because only the top slice is taxed at the higher figure [6].
Tax codes and cumulative PAYE
Under PAYE, income tax is normally calculated cumulatively across the tax year rather than in isolation each month [6]. The employer tracks how much allowance and taxable income the employee has used since 6 April and adjusts each payslip so the right total is reached by year end [5]. This is why a mid-year tax code change can produce a one-off refund or a larger deduction as the cumulative figures rebalance [5]. A business embedding payroll into its own software can run these calculations through an HMRC-recognised payroll API rather than building the band logic from scratch.
Where other income sits in the bands
The bands do not apply to salary alone. Dividends, savings interest and other taxable income are stacked on top of earnings, and the order in which income is layered decides which band each type falls into [1]. This layering catches out company directors and savers who assume their non-salary income is taxed in isolation.
Dividends stack above earnings
Dividend income is taxed after earnings, so it sits in whichever band remains once salary has used up the lower bands [12]. Dividends have their own rates rather than the main income tax rates, and the first £500 each year is covered by the dividend allowance [12]. A director drawing a small salary plus dividends therefore fills the basic rate band with salary first, then pays the basic dividend rate on dividends until the £50,270 higher rate threshold is reached, after which the higher dividend rate applies [12]. The bands are shared across both income types, not duplicated, which is a frequent source of underpayment [1].
Savings interest and its own allowance
Savings interest is also stacked on top of earnings and has a personal savings allowance that depends on the taxpayer's highest band [13]. A basic rate taxpayer can receive £1,000 of interest tax-free, a higher rate taxpayer £500, and an additional rate taxpayer nothing [13]. Because the allowance shrinks as income rises, the same £900 of interest can be tax-free for one person and taxable for another, purely because of the band their earnings reach [13]. For sole traders and one-person companies weighing how to draw income, the interaction is worth modelling on a payroll platform for small businesses before deciding [12].
Work out the tax on any salary
Because the bands interact with National Insurance, the personal allowance taper and the tax code, the quickest way to see the net effect on a given salary is to run the figure through a tool. The Moonworkers UK salary calculator applies the 2026-27 income tax bands and National Insurance rules to any gross salary and shows the take-home result.
£ per month
e.g. 1257L, S1257L, BR, D0
S = Scotland · C = Wales · W1/M1 = non-cumulative
Enter a salary or hourly rate above
About this calculator
This calculator gives you a close estimate of your UK payroll deductions for 2026-27, using HMRC's exact percentage method. It covers the vast majority of employees on standard tax codes, but it won't match your payslip to the penny in every case. Edge cases it does not cover include in-year tax code changes, K-code carry-forwards, Week 53 adjustments, payrolled benefits in kind, and multi-employment NI deferral. Powered by the same engine as the Moonworkers Payroll API.
Frequently asked questions
Why might the result differ from my payslip?
This calculator uses your current gross pay and tax code to produce an estimate. Your employer may apply adjustments not covered here, such as mid-year tax code changes, K-code carry-forwards, or benefits in kind processed through payroll. For most employees on a standard tax code these differences are negligible.
What tax code should I enter?
Use the tax code shown on your most recent payslip or the PAYE Coding Notice (P2) from HMRC. If you're not sure, 1257L is the standard code for most employees resident in England, Wales, or Northern Ireland. Use S1257L for Scotland or C1257L for Wales if you pay Scottish or Welsh income tax.
Which NI category applies to me?
Most employees use Category A. Use M if you are under 21, H if you are an apprentice under 25, or C if you are over State Pension age. Your employer is responsible for assigning the correct category — if in doubt, check your payslip.
Which student loan plan am I on?
Your plan depends on when and where you studied. Plan 1 covers students who started before September 2012. Plan 2 is for English and Welsh students who started from September 2012 to July 2023. Plan 5 applies to English students who started from August 2023. Plan 4 covers Scottish students. You can check your plan at gov.uk or on your payslip.
What is the YTD cumulative PAYE mode?
HMRC's standard method calculates income tax on your total earnings to date each period, then subtracts tax already paid. If you're mid-year and want to see exactly what tax should be deducted in a specific period, expand the Year-to-date section and enter your running totals from previous periods only.
For anyone who wants to check that the right code has been applied rather than the tax itself, the tax code checker decodes what a given code means for the personal allowance.
Conclusion
The UK income tax bands are simpler than they look once the marginal principle is clear: each rate applies only to its own slice of income, and moving up a band never re-taxes what came before [1]. The complications lie at the edges, in Scotland's separate six-band structure, in the 60% zone hidden above £100,000, and in the frozen thresholds slowly reshaping who pays what [9].
For employers and payroll teams, the bands are not a matter of interpretation but of accurate application, and the tax code is the instrument that carries them onto each payslip. As the freeze continues to pull more earners upward, the value of getting the bands and codes right on every payslip only grows.
Frequently asked questions
Does moving into a higher tax band mean the whole salary is taxed at the higher rate?
No. UK income tax is charged band by band, so a higher rate applies only to the portion of income that falls within that band [1]. Someone earning just above £50,270 pays 40% only on the amount above that threshold, not on their entire salary [1]. Their overall or average rate stays well below the headline higher rate, which is why an extra pound of earnings never reduces total take-home pay.
Why do Scottish taxpayers pay different income tax?
Income tax on earnings is partly devolved, so the Scottish Parliament sets its own rates and thresholds [2]. Scotland uses six bands from 19% to 48%, compared with three in the rest of the UK, and its higher rate of 42% starts at a lower income level [3]. A Scottish taxpayer is flagged by a tax code beginning with S, and the employer applies the Scottish bands to that person's earnings [5].
What is the 60% tax trap?
Between £100,000 and £125,140 of income, the personal allowance is withdrawn by £1 for every £2 earned, which layers an extra effective charge on top of the 40% higher rate [9]. The combined effect is an effective marginal rate of 60% on income in that band [9]. It is not a formal tax band but a by-product of the allowance taper, and it makes pension contributions particularly valuable for earners in that range.
How are the income tax bands applied to my pay each month?
Through PAYE, income tax is worked out cumulatively across the tax year rather than as a flat slice each month [6]. The employer uses the tax code to spread the personal allowance evenly and tracks year-to-date income so the correct total tax is reached by 5 April [5]. If a code changes partway through the year, the next payslip rebalances the figures, which can produce a refund or a catch-up deduction [5].
