Tax Calculator UK 2025/26
Calculate income tax, National Insurance, student loans & take-home pay. Comprehensive HMRC-aligned UK tax tool.
Last updated: February 2026
UK Tax Calculator 2025/26
Calculate income tax and National Insurance contributions for the 2025/26 tax year
Want to reduce your tax bill?
Compare Tax Accountants Free →Free, no-obligation comparison of UK tax advisors
Understanding UK Income Tax 2025/26
The UK income tax system is based on
progressive tax rates
, meaning you pay higher rates as your income increases. For the 2025/26 tax year, the system consists of three main tax bands plus a personal allowance that allows you to earn £12,570 tax-free.
Your income tax is calculated by HMRC (His Majesty's Revenue and Customs) based on your earnings from employment, self-employment, pensions, and other taxable income. Understanding how these tax bands work is essential for financial planning and ensuring you're paying the correct amount.
Key Tax Facts for 2025/26
-
Personal Allowance:
£12,570 (tax-free)
-
Basic Rate:
20% on income £12,571 - £50,270
-
Higher Rate:
40% on income £50,271 - £125,140
-
Additional Rate:
45% on income over £125,140
-
Personal Allowance Taper:
Reduces above £100,000
HMRC Compliant
Secure & Private
190+ Calculators
Always Free
UK Tax Bands 2025/26 - Detailed Breakdown
Personal Allowance: £12,570
What it means:
You can earn up to £12,570 per year completely tax-free.
Who gets it:
Most UK residents, including employed, self-employed, and pensioners.
Important:
Your personal allowance reduces by £1 for every £2 earned above £100,000. At £125,140 or more, you lose the entire allowance.
Example: If you earn £20,000:
Tax-free: £12,570 | Taxable: £7,430 | Tax paid: £1,486 (20% of £7,430)
Basic Rate: 20% (£12,571 - £50,270)
Rate:
20% on income between £12,571 and £50,270
Taxable range:
£37,700 maximum at this rate
Maximum tax in this band:
£7,540 (20% of £37,700)
Example: If you earn £40,000:
Tax-free: £12,570 | Basic rate: £27,430 @ 20% = £5,486 total tax
Higher Rate: 40% (£50,271 - £125,140)
Rate:
40% on income between £50,271 and £125,140
Taxable range:
£74,870 maximum at this rate
You also pay:
20% on previous £37,700 (£7,540)
Example: If you earn £75,000:
Tax-free: £12,570
Basic rate: £37,700 @ 20% = £7,540
Higher rate: £24,730 @ 40% = £9,892
Total tax: £17,432
Additional Rate: 45% (Over £125,140)
Rate:
45% on all income above £125,140
Note:
At this income level, you have no personal allowance (tapered to zero)
Total tax paid:
Cumulative from all bands
Example: If you earn £150,000:
No personal allowance (tapered to zero)
Basic rate: £37,700 @ 20% = £7,540
Higher rate: £74,870 @ 40% = £29,948
Additional rate: £37,430 @ 45% = £16,844
Total tax: £54,332 (36.2% effective rate)
The £100,000 Personal Allowance Trap
Between £100,000 and £125,140, you face an
effective 60% tax rate
due to personal allowance tapering:
-
40% higher rate income tax
-
Plus 20% on income that was previously covered by personal allowance
-
= 60% effective marginal rate on income £100,000 - £125,140
Tax Planning Tip:
Consider pension contributions to reduce adjusted net income below £100,000 and retain your personal allowance.
5 Real-World Tax Calculation Examples
Example 1: Entry-Level Graduate (£28,000 salary)
Income Breakdown:
Gross Annual Salary
£28,000
Personal Allowance (tax-free)
-£12,570
Taxable Income
£15,430
Tax Calculation:
Basic Rate (20%): £15,430 × 20% =
£3,086
National Insurance (8%): £15,430 × 8% =
£1,234
Total Deductions: £4,320
Annual Take-Home Pay
£23,680
£1,922 per month | Effective tax rate: 17.6%
Example 2: UK Median Salary (£35,000)
Income Breakdown:
Gross Annual Salary
£35,000
Personal Allowance
-£12,570
Taxable Income
£22,430
Tax Calculation:
Income Tax (20%): £22,430 × 20% =
£4,486
National Insurance (8%): £22,430 × 8% =
£1,794
Total Deductions: £6,280
Annual Take-Home Pay
£28,720
£2,319 per month | Effective tax rate: 20.5%
Example 3: Higher Rate Taxpayer (£60,000 salary)
Income Breakdown:
Gross Annual Salary
£60,000
Personal Allowance
-£12,570
Taxable Income
£47,430
Tax Calculation (Two Bands):
Basic Rate Band:
£37,700 × 20% =
£7,540
Higher Rate Band:
£9,730 × 40% =
£3,892
(£47,430 - £37,700 = £9,730 in higher rate)
Income Tax Total:
£11,432
National Insurance: £37,700 × 8% + £9,730 × 2% =
£3,211
Total Deductions: £14,643
Annual Take-Home Pay
£45,357
£3,780 per month | Effective tax rate: 24.4%
Example 4: Personal Allowance Taper Zone (£110,000)
Income Breakdown (With Taper):
Gross Annual Salary
£110,000
Personal Allowance Reduction
-£5,000
Reduced Personal Allowance
£7,570
Taxable Income
£102,430
Calculation: Income over £100K = £10,000 | Taper = £10,000 ÷ 2 = £5,000 reduction
Tax Calculation (Effective 60% on £10K):
Basic Rate: £37,700 × 20% =
£7,540
Higher Rate: £64,730 × 40% =
£25,892
Income Tax Total:
£33,432
National Insurance:
£5,713
Total Deductions: £39,145
Effective Rate on £10K Above £100K: 60%
Due to 40% tax + 20% on tapered allowance
Annual Take-Home Pay
£70,855
£5,905 per month | Effective tax rate: 35.6%
Example 5: Additional Rate Taxpayer (£180,000)
Income Breakdown:
Gross Annual Salary
£180,000
Personal Allowance
£0 (tapered to zero)
Taxable Income
£180,000
Tax Calculation (Three Bands):
Basic Rate:
£37,700 × 20% =
£7,540
Higher Rate:
£74,870 × 40% =
£29,948
Additional Rate:
£67,430 × 45% =
£30,344
(£180,000 - £112,570 = £67,430 in additional rate)
Income Tax Total:
£67,832
National Insurance:
£7,109
Total Deductions: £74,941
Annual Take-Home Pay
£105,059
£8,755 per month | Effective tax rate: 41.6%
Regional Tax Differences: England, Scotland & Wales
Tax rates vary across the UK. Scotland has its own income tax bands, while England, Wales, and Northern Ireland share the same system.
England, Wales & Northern Ireland (2025/26)
Scotland (2025/26) - 6 Tax Bands
Scotland has more tax bands and different rates:
Note: Scottish taxpayers generally pay more tax at higher incomes than rest of UK.
Key Differences
-
Scotland has 6 tax bands
vs 3 in England/Wales/NI
-
Higher earners pay more in Scotland:
Top rate 48% vs 45%
-
Lower earners may pay slightly less
due to 19% starter rate
-
Personal Allowance is UK-wide:
£12,570 for everyone
-
National Insurance is UK-wide:
Same rates everywhere
National Insurance Contributions 2025/26
National Insurance (NI) is a separate tax that funds the NHS, state pension, and benefits. You pay NI if you're 16 or over and earning above the threshold.
Employee National Insurance Rates
£0 - £12,570
0%
£12,571 - £50,270
12%
Over £50,270
2%
Self-Employed National Insurance
Self-employed individuals pay Class 2 and Class 4 NI:
-
Class 2:
£3.50 per week (if profits over £12,570)
-
Class 4:
6% on profits £12,571 - £50,270
-
Class 4:
2% on profits over £50,270
About This Calculator
Understanding UK Income Tax 2025/26
The UK income tax system is based on progressive tax rates , meaning you pay higher rates as your income increases. For the 2025/26 tax year, the system consists of three main tax bands plus a personal allowance that allows you to earn £12,570 tax-free.
Your income tax is calculated by HMRC (His Majesty's Revenue and Customs) based on your earnings from employment, self-employment, pensions, and other taxable income. Understanding how these tax bands work is essential for financial planning and ensuring you're paying the correct amount.
Key Tax Facts for 2025/26
- Personal Allowance: £12,570 (tax-free)
- Basic Rate: 20% on income £12,571 - £50,270
- Higher Rate: 40% on income £50,271 - £125,140
- Additional Rate: 45% on income over £125,140
- Personal Allowance Taper: Reduces above £100,000
UK Tax Bands 2025/26 - Detailed Breakdown
Personal Allowance: £12,570
What it means: You can earn up to £12,570 per year completely tax-free.
Who gets it: Most UK residents, including employed, self-employed, and pensioners.
Important: Your personal allowance reduces by £1 for every £2 earned above £100,000. At £125,140 or more, you lose the entire allowance.
Example: If you earn £20,000:
Tax-free: £12,570 | Taxable: £7,430 | Tax paid: £1,486 (20% of £7,430)
Basic Rate: 20% (£12,571 - £50,270)
Rate: 20% on income between £12,571 and £50,270
Taxable range: £37,700 maximum at this rate
Maximum tax in this band: £7,540 (20% of £37,700)
Example: If you earn £40,000:
Tax-free: £12,570 | Basic rate: £27,430 @ 20% = £5,486 total tax
Higher Rate: 40% (£50,271 - £125,140)
Rate: 40% on income between £50,271 and £125,140
Taxable range: £74,870 maximum at this rate
You also pay: 20% on previous £37,700 (£7,540)
Example: If you earn £75,000:
Tax-free: £12,570
Basic rate: £37,700 @ 20% = £7,540
Higher rate: £24,730 @ 40% = £9,892
Total tax: £17,432
Additional Rate: 45% (Over £125,140)
Rate: 45% on all income above £125,140
Note: At this income level, you have no personal allowance (tapered to zero)
Total tax paid: Cumulative from all bands
Example: If you earn £150,000:
No personal allowance (tapered to zero)
Basic rate: £37,700 @ 20% = £7,540
Higher rate: £74,870 @ 40% = £29,948
Additional rate: £37,430 @ 45% = £16,844
Total tax: £54,332 (36.2% effective rate)
The £100,000 Personal Allowance Trap
Between £100,000 and £125,140, you face an effective 60% tax rate due to personal allowance tapering:
- 40% higher rate income tax
- Plus 20% on income that was previously covered by personal allowance
- = 60% effective marginal rate on income £100,000 - £125,140
Tax Planning Tip: Consider pension contributions to reduce adjusted net income below £100,000 and retain your personal allowance.
5 Real-World Tax Calculation Examples
Example 1: Entry-Level Graduate (£28,000 salary)
Income Breakdown:
| Gross Annual Salary | £28,000 |
| Personal Allowance (tax-free) | -£12,570 |
| Taxable Income | £15,430 |
Tax Calculation:
Basic Rate (20%): £15,430 × 20% = £3,086
National Insurance (8%): £15,430 × 8% = £1,234
Total Deductions: £4,320
Annual Take-Home Pay
£23,680
£1,922 per month | Effective tax rate: 17.6%
Example 2: UK Median Salary (£35,000)
Income Breakdown:
| Gross Annual Salary | £35,000 |
| Personal Allowance | -£12,570 |
| Taxable Income | £22,430 |
Tax Calculation:
Income Tax (20%): £22,430 × 20% = £4,486
National Insurance (8%): £22,430 × 8% = £1,794
Total Deductions: £6,280
Annual Take-Home Pay
£28,720
£2,319 per month | Effective tax rate: 20.5%
Example 3: Higher Rate Taxpayer (£60,000 salary)
Income Breakdown:
| Gross Annual Salary | £60,000 |
| Personal Allowance | -£12,570 |
| Taxable Income | £47,430 |
Tax Calculation (Two Bands):
Basic Rate Band: £37,700 × 20% = £7,540
Higher Rate Band: £9,730 × 40% = £3,892
(£47,430 - £37,700 = £9,730 in higher rate)
Income Tax Total: £11,432
National Insurance: £37,700 × 8% + £9,730 × 2% = £3,211
Total Deductions: £14,643
Annual Take-Home Pay
£45,357
£3,780 per month | Effective tax rate: 24.4%
Example 4: Personal Allowance Taper Zone (£110,000)
Income Breakdown (With Taper):
| Gross Annual Salary | £110,000 |
| Personal Allowance Reduction | -£5,000 |
| Reduced Personal Allowance | £7,570 |
| Taxable Income | £102,430 |
Calculation: Income over £100K = £10,000 | Taper = £10,000 ÷ 2 = £5,000 reduction
Tax Calculation (Effective 60% on £10K):
Basic Rate: £37,700 × 20% = £7,540
Higher Rate: £64,730 × 40% = £25,892
Income Tax Total: £33,432
National Insurance: £5,713
Total Deductions: £39,145
Effective Rate on £10K Above £100K: 60%
Due to 40% tax + 20% on tapered allowance
Annual Take-Home Pay
£70,855
£5,905 per month | Effective tax rate: 35.6%
Example 5: Additional Rate Taxpayer (£180,000)
Income Breakdown:
| Gross Annual Salary | £180,000 |
| Personal Allowance | £0 (tapered to zero) |
| Taxable Income | £180,000 |
Tax Calculation (Three Bands):
Basic Rate: £37,700 × 20% = £7,540
Higher Rate: £74,870 × 40% = £29,948
Additional Rate: £67,430 × 45% = £30,344
(£180,000 - £112,570 = £67,430 in additional rate)
Income Tax Total: £67,832
National Insurance: £7,109
Total Deductions: £74,941
Annual Take-Home Pay
£105,059
£8,755 per month | Effective tax rate: 41.6%
Regional Tax Differences: England, Scotland & Wales
Tax rates vary across the UK. Scotland has its own income tax bands, while England, Wales, and Northern Ireland share the same system.
England, Wales & Northern Ireland (2025/26)
Scotland (2025/26) - 6 Tax Bands
Scotland has more tax bands and different rates:
Note: Scottish taxpayers generally pay more tax at higher incomes than rest of UK.
Key Differences
- Scotland has 6 tax bands vs 3 in England/Wales/NI
- Higher earners pay more in Scotland: Top rate 48% vs 45%
- Lower earners may pay slightly less due to 19% starter rate
- Personal Allowance is UK-wide: £12,570 for everyone
- National Insurance is UK-wide: Same rates everywhere
National Insurance Contributions 2025/26
National Insurance (NI) is a separate tax that funds the NHS, state pension, and benefits. You pay NI if you're 16 or over and earning above the threshold.
Employee National Insurance Rates
| £0 - £12,570 | 0% |
| £12,571 - £50,270 | 12% |
| Over £50,270 | 2% |
Self-Employed National Insurance
Self-employed individuals pay Class 2 and Class 4 NI:
- Class 2: £3.50 per week (if profits over £12,570)
- Class 4: 6% on profits £12,571 - £50,270
- Class 4: 2% on profits over £50,270
This calculator is part of UK Calculator's comprehensive suite of financial, health, and utility tools designed specifically for UK residents. All calculations use the latest 2025/26 tax rates and official UK guidelines.
Why Use UK Calculator?
- Accurate: Updated with the latest UK rates and regulations
- Free: No registration or payment required
- Privacy-focused: All calculations performed locally in your browser
- Mobile-friendly: Works on all devices
Related: Universal Credit Calculator — Check your Universal Credit entitlement alongside your tax calculations.
Related CalculatorsExplore our other popular calculators:
- Salary Calculator - Calculate take-home pay after tax and NI
- Mortgage Calculator - Calculate monthly payments and affordability
- Tax Calculator - Calculate income tax for 2025/26
- VAT Calculator - Add or remove VAT at 20%
- Road Tax Calculator - Calculate VED rates and car tax bands for 2025/26
- UK Tax Year 2025/26 Guide - Complete guide to UK tax year dates, deadlines and key changes
UK Tax Calculator Information
Calculate your UK income tax and National Insurance contributions with our accurate tax calculator. Updated for 2025/26 tax year with current rates and allowances.
Tax Calculation Details
- Personal allowance: £12,570 for 2025/26
- Basic rate: 20% on income £12,571 to £50,270
- Higher rate: 40% on income £50,271 to £125,140
- Additional rate: 45% on income over £125,140
- National Insurance contributions at current rates
The calculator helps you understand your tax liability and plan your finances effectively. It includes both employed and self-employed tax calculations.
Smart UK Tax Planning Strategies 2025/26
Legal tax planning can significantly reduce your tax bill. Here are proven strategies used by UK taxpayers to minimize tax liability while staying compliant with HMRC rules.
Maximize Pension Contributions
How it works: Pension contributions receive tax relief at your marginal rate (20%, 40%, or 45%).
Example: £60K earner contributes £10K to pension = £4,000 tax saved (40% relief)
Annual limit: £60,000 (2025/26)
Pro tip: Carry forward unused allowances from previous 3 years to contribute up to £180,000 in one year!
Use Gift Aid & Charitable Giving
How it works: Donations extend your tax bands, reducing higher-rate tax.
Example: Earn £52K, donate £1,000 via Gift Aid = £500 tax saving (moves £1,250 of income from 40% to 20% band)
Tax saving: 20% on donations for higher-rate taxpayers
Pro tip: Claim back via Self Assessment even if not self-employed!
Transfer Marriage Allowance
How it works: Non-earning spouse transfers 10% of personal allowance (£1,260) to working spouse.
Eligibility: One earns under £12,570, other is basic-rate taxpayer (£12,571-£50,270)
Tax saving: £252 per year (20% of £1,260)
Pro tip: Claim backdated for up to 4 years = £1,008 lump sum!
Salary Sacrifice Schemes
How it works: Reduce salary in exchange for benefits, saving income tax AND National Insurance.
Popular schemes: Pension (saves 32%-47%), Cycle to Work, Electric Vehicle, Childcare Vouchers
Example: £40K salary, sacrifice £2K for pension = £840 saving (20% tax + 12% NI)
Pro tip: Higher-rate taxpayers save 42%-47% including NI!
Use ISAs & Tax-Free Savings
How it works: Investments in ISAs grow completely tax-free (no income tax, capital gains tax, or dividend tax).
2025/26 allowance: £20,000 per person per year
Saving example: £20K earning 5% = £1,000/year dividend income tax-free (£450 saved at 45% rate)
Pro tip: Couples can shelter £40,000/year = £1.2M tax-free after 30 years!
Avoid the £100K Trap
The problem: Income £100K-£125,140 faces 60% effective tax rate due to personal allowance taper.
Solution: Reduce taxable income below £100K using pension contributions, charitable donations, or salary sacrifice.
Example: £110K salary, contribute £10K to pension = drops to £100K, keeps full £12,570 personal allowance = £5,028 tax saved!
Pro tip: Every £2 contributed saves £1.20 in tax at the 60% zone!
Combining Strategies = Maximum Savings
A £60K earner using pension (£10K), Gift Aid (£1K), and Marriage Allowance could save £4,252/year in tax!
7 Common UK Tax Mistakes (And How to Avoid Them)
Avoid these costly errors that cost UK taxpayers millions every year. Simple mistakes can lead to overpaying tax, penalties, or missed opportunities.
1⃣ Not Claiming Marriage Allowance
Cost: £252/year (£1,008 if backdated 4 years)
The mistake: 2.4 million eligible couples don't claim the Marriage Allowance, losing £252/year.
Who's eligible: One partner earns under £12,570, the other earns £12,571-£50,270
Fix: Apply via Gov.uk Marriage Allowance service (takes 5 minutes, claim backdated to 2020!)
2⃣ Not Checking Your Tax Code
Cost: £500-£3,000/year (varies by error)
The mistake: HMRC estimates 1 in 10 tax codes are wrong, causing under/overpayment.
Common errors: Emergency tax code (BR, 0T), outdated allowances, multiple jobs not updated
Fix: Check your payslip monthly. Standard code for 2025/26 is 1257L. Contact HMRC if wrong.
3⃣ Missing Pension Tax Relief
Cost: £800-£4,500/year (20%-45% of contributions)
The mistake: Higher/additional-rate taxpayers not claiming extra 20%-25% tax relief via Self Assessment.
Example: £60K earner contributes £10K, gets 20% automatic (£2K), but misses extra 20% (£2K) = £2,000 lost!
Fix: File Self Assessment and claim additional relief in "Tax reliefs" section. Backdated 4 years!
4⃣ Paying Tax on Savings Interest Unnecessarily
Cost: £200-£1,000/year (depends on savings)
The mistake: Not utilizing Personal Savings Allowance (PSA): basic-rate £1,000, higher-rate £500, additional-rate £0.
Example: Basic-rate taxpayer with £25K savings at 5% = £1,250 interest. First £1,000 tax-free, only £250 taxable!
Fix: Move excess above PSA into ISAs (£20K allowance, completely tax-free). Use R85 form if non-taxpayer.
5⃣ Triggering the £100K Personal Allowance Trap
Cost: £6,000+ (60% effective tax rate on £100K-£125,140)
The mistake: Earning £100K-£125,140 without reducing taxable income, facing 60% marginal tax (40% tax + 20% on tapered allowance).
Example: £110K salary pays £6,000 more tax than optimized £100K salary with £10K pension contribution!
Fix: Use pension contributions, salary sacrifice, or Gift Aid to reduce taxable income below £100K.
6⃣ Missing the Self Assessment Deadline
Cost: £100 late filing penalty + £10/day after 3 months + interest on unpaid tax
The mistake: Missing 31 January deadline for online Self Assessment returns.
Penalties escalate: £100 (1 day late), £10/day after 3 months (max £900), £300+ after 6 months, £300+ after 12 months
Fix: Set calendar reminder for early January. File early to avoid January rush and potential system crashes.
7⃣ Not Claiming Work-From-Home Tax Relief
Cost: £62-£125/year (£6/week allowance = £312 tax-free, saves £62-£140 depending on rate)
The mistake: Working from home but not claiming £6/week tax-free allowance for household costs (heating, electricity, internet).
Who's eligible: Anyone who works from home regularly (even 1 day/week), including hybrid workers.
Fix: Claim via Gov.uk online service or Self Assessment. Claim backdated for 2020/21, 2021/22, 2022/23, 2023/24!
Total Potential Loss from All Mistakes
£8,000 - £15,000/year
Don't leave money on the table! Check your tax affairs today.
Official UK Tax Resources & Tools
Always verify tax information with official UK government sources. Here are the authoritative resources for UK taxation:
HM Revenue & Customs (HMRC)
Website: gov.uk/hmrc
Official UK tax authority - tax rates, Self Assessment, tax codes, PAYE
Helpline: 0300 200 3300 (Mon-Fri 8am-6pm)
Gov.uk Online Tax Services
Personal Tax Account: Check tax code, claim Marriage Allowance
Self Assessment: File returns, calculate tax, pay online
MoneyHelper (Government-backed)
Website: moneyhelper.org.uk
Free, impartial guidance on tax, pensions, savings, and benefits
Phone: 0800 011 3797 (Mon-Fri 9am-5pm)
HMRC Tax Calculators
Income Tax: Estimate your tax bill
Marriage Allowance: Check eligibility & apply
Key Official Tax Guidance Documents
- Income Tax Rates 2025/26: gov.uk/income-tax-rates
- Tax Codes Explained: gov.uk/tax-codes
- Self Assessment Guide: gov.uk/self-assessment-tax-returns/overview
- National Insurance Rates: gov.uk/national-insurance-rates-letters
- Scottish Income Tax: gov.uk/scottish-income-tax
Related UK Financial Calculators
Plan your complete UK financial picture with our comprehensive suite of calculators. All updated for 2025/26 tax year.
Salary Calculator
Calculate take-home pay from gross salary including tax, NI, pension, and student loans
Income Tax Calculator
Detailed income tax breakdown with Scotland/England comparison and tax planning
Pension Calculator
Project retirement income with State Pension, workplace pensions, and tax relief
Mortgage Calculator
Calculate monthly payments, affordability, and total interest over mortgage term
Stamp Duty Calculator
Calculate SDLT for England/NI, LBTT for Scotland, LTT for Wales with FTB relief
Loan Calculator
Calculate loan repayments, total interest, and compare different loan terms
Related Tools
Related Calculators
Calculate your gross and net salary
Income Tax CalculatorDetailed UK income tax breakdown
National Insurance CalculatorCalculate your NI contributions
Take Home Pay CalculatorSee your actual take-home pay
Pension CalculatorPlan your pension contributions
Student Loan CalculatorCalculate student loan repayments
Expert Reviewed — This calculator is reviewed by our team of financial experts and updated regularly with the latest UK tax rates and regulations. Last verified: February 2026.
Pro Tips for Accurate Results
- Double-check your input values before calculating
- Use the correct unit format (metric or imperial)
- For complex calculations, break them into smaller steps
- Bookmark this page for quick future access
Understanding Your Results
Our Tax Calculator provides:
- Instant calculations - Results appear immediately
- Accurate formulas - Based on official UK standards
- Clear explanations - Understand how results are derived
- 2025/26 updated - Using current rates and regulations
Common Questions
Is this calculator free?
Yes, all our calculators are 100% free to use with no registration required.
Are the results accurate?
Our calculators use verified formulas and are regularly updated for accuracy.
Can I use this on mobile?
Yes, all calculators are fully responsive and work on any device.
People Also Ask
7 Smart UK Tax Strategies (2025/26) - Save £2,000-£15,000+/Year With These Expert Tactics
Proven strategies used by UK tax experts and financial advisors to minimize tax legally. Updated January 2025 with current HMRC rules.
1. Use All Tax Allowances (Personal, Savings, Dividend, Trading) - Shelter £15,070+ Tax-Free, Save £2,514-£6,000+/Year
How it works: UK has multiple tax allowances = tax-free income bands. Personal Allowance: £12,570 (reduces £100K-£125K, lost fully at £125,140). Personal Savings Allowance: £1,000 (basic rate) / £500 (higher rate) tax-free interest. Dividend Allowance: £500 tax-free dividends (company directors). Trading Allowance: £1,000 self-employment/misc income. Property Allowance: £1,000 rental income. Critical: Use all allowances EVERY year = maximize tax-free income. Real UK example (2025/26): Sarah is a basic rate taxpayer with side income. She earns: Salary: £40,000 (uses Personal Allowance £12,570 = £27,430 taxable). Savings interest: £900 (under £1,000 PSA = £0 tax). Freelance work: £950 (under £1,000 Trading Allowance = £0 tax). Total: £41,850 income. Tax-free: £12,570 + £900 + £950 = £14,420. Taxable: £40,000 - £12,570 = £27,430 @ 20% = £5,486 tax. If Sarah didn't know about allowances: She might declare freelance £950 + interest £900 = £1,850 extra taxable income. Extra tax: £1,850 × 20% = £370/year overpaid! Higher rate example: Mark earns £80,000 salary, £400 savings interest, £450 dividends from company. Personal Allowance: £12,570. PSA (higher rate): £500 (covers £400 interest). Dividend Allowance: £500 (covers £450 dividends). Tax-free total: £12,570 + £400 + £450 = £13,420. Without using allowances properly: Mark pays tax on £850 at higher rates = £340 overpaid! Action: Check all income sources, use every allowance, don't declare income covered by allowances as taxable!
2. Salary Sacrifice Pension (Avoid Higher Rate Tax) - Save 32-47% On Every £1, Reduce Tax Bill £2,000-£10,000+/Year
How it works: Salary sacrifice = reduce gross salary BEFORE tax calculated, employer pays "saved" amount into pension. Avoid 40-45% income tax + 2% NI. Higher rate taxpayers save most. Critical: If earning £50,270-£60,000, salary sacrifice brings you below £50,270 higher rate threshold = drop from 40% to 20% on sacrificed amount = 20% instant saving! Real UK example (2025/26): Emma earns £55,000, wants £5,000 pension (bring income below higher rate threshold). Normal method (net pay): Salary: £55,000. Tax: £8,432 (£7,540 basic + £892 higher @ 40% on £55,000-£50,270 = £4,730). NI: £4,664. Take-home: £41,904. Emma contributes £5,000 from take-home. HMRC adds 20% = £6,250 total. Emma claims 20% higher rate relief = £1,000 refund. Cost: £5,000 - £1,000 = £4,000 net. Salary sacrifice method: Emma sacrifices £5,000 (salary becomes £50,000). Tax: £7,486 (all basic rate, no higher rate!). NI: £4,064 (£600 less). Take-home: £38,450. But £5,000 goes to pension! Emma's total: £38,450 + £5,000 = £43,450. Vs normal: £41,904 - £5,000 + £1,000 refund = £37,904 after contribution. Emma gains: £43,450 - £37,904 = £5,546/year! Plus employer saves NI: £5,000 × 15% = £750. Many add 50% to pension = £375 extra. Total: £5,546 + £345 = £5,891/year benefit!
3. Marriage Allowance (Transfer 10% Personal Allowance) - Save £252/Year, Backdate 4 Years For £1,008 Lump Sum
How it works: If one spouse earns under £12,570 (Personal Allowance) and other is basic rate taxpayer, transfer 10% allowance (£1,260) = save 20% of £1,260 = £252/year. Can backdate 4 years if eligible = £1,008 lump sum! 2.4 million eligible UK couples not claiming! Real UK example (2025/26): Tom earns £40,000, wife Lisa earns £8,000. Without Marriage Allowance: Tom: £40,000 - £12,570 = £27,430 taxable @ 20% = £5,486 tax. Lisa: £8,000 (under £12,570) = £0 tax. Total tax: £5,486. With Marriage Allowance: Lisa transfers £1,260 to Tom (she only uses £8,000 of her £12,570 allowance, has £4,570 unused). Tom's allowance: £12,570 + £1,260 = £13,830. Tom: £40,000 - £13,830 = £26,170 @ 20% = £5,234 tax. Tax saved: £5,486 - £5,234 = £252/year. Lisa still pays £0 (income £8,000 under reduced allowance £11,310). Backdate: If eligible since 2020, claim 4 years: £252 × 4 = £1,008 lump sum! Action: Apply at GOV.UK Personal Tax Account, takes 5 minutes, automatic renewal annually, benefit paid through tax code adjustment.
4. ISA Tax Shelters (Shield £20,000/Year Tax-Free) - Protect £100,000+ From 40% CGT/Income Tax Over 10 Years
How it works: ISAs = tax-free wrappers for savings/investments. £20,000 annual allowance. All growth, interest, dividends = 0% tax forever. vs non-ISA: pay 20-40% income tax on interest, 8.75-39.35% on dividends, 10-20% Capital Gains Tax on profits. Over 10-20 years, ISA saves tens of thousands in tax! Real UK example (2025/26): Sophie has £50,000 to invest, earns 7% annually. In ISA (10 years): £50,000 grows to £98,358 (7% compound). Tax: £0. Profit: £48,358, keep all! Outside ISA (10 years): £50,000 grows to £98,358. Dividends each year: ~£3,500. Tax on dividends (higher rate, above £500 allowance): £3,000 × 33.75% = £1,012/year × 10 years = £10,120 tax paid during growth. After 10 years, sell shares. Capital gain: £48,358. CGT allowance: £3,000 (2025/26). Taxable gain: £45,358 @ 24% (higher rate) = £10,886 CGT. Total tax: £10,120 + £9,072 = £19,192! ISA saves: £19,192 over 10 years. With full £20K ISA annually: Max ISA over 10 years: £200,000 contributed. At 7% growth = £276,152 final value. Tax saved vs non-ISA: ~£50,000-£80,000 depending on growth rate! Action: Open Stocks & Shares ISA, transfer existing savings, use full £20K allowance every tax year (resets 6 April).
5. Maximize Pension Contributions (Get 20-45% Tax Relief) - Save £2,000-£20,000/Year In Tax, Build £500K+ Tax-Free Retirement Fund
How it works: Pension contributions get immediate tax relief = HMRC adds 20% automatically (basic rate), higher/additional rate taxpayers claim extra 20-25% via Self Assessment. Plus: employer NI savings (can boost contribution), 25% pension lump sum tax-free at retirement, growth tax-free inside pension. Annual Allowance: £60,000 (most people). Carry forward unused from 3 previous years = up to £180,000 in one year! Real UK example (2025/26): James is higher rate taxpayer (£70,000 salary), contributes £10,000 gross to pension via Relief at Source. How it works: James pays £8,000 net (80%). Pension provider claims 20% from HMRC = £2,000. Total in pension: £10,000. James claims extra 20% higher rate relief on Self Assessment: £10,000 × 20% = £2,000 refund or reduced tax bill. James' real cost: £8,000 - £2,000 = £6,000 for £10,000 pension! Effective: James pays 60p, gets £1 pension = 67% return instantly! Additional rate example (£150,000 income): Contribute £20,000 gross. Pay net: £12,000 (60%). HMRC adds 20%: £4,000. Total: £20,000 in pension. Claim 25% additional rate relief: £20,000 × 25% = £5,000. Real cost: £12,000 - £5,000 = £7,000 for £20,000 pension! Plus: If earning £100K-£125K, pension contributions restore Personal Allowance (avoid 60% trap!) = save £6,000-£12,000 extra! Action: Maximize pension to Annual Allowance, use salary sacrifice if available, claim higher/additional rate relief via Self Assessment.
6. Gift Aid Donations (Extend Basic Rate Band) - Higher Rate Taxpayers Save 25% On Donations, Reduce Tax Bill £2,500+ On £10,000 Given
How it works: Gift Aid = charities claim 25% top-up from HMRC on donations (you donate £80, charity gets £100). For higher/additional rate taxpayers: Gift Aid extends basic rate tax band = income taxed at 20% instead of 40-45% = 20-25% tax saving! Real UK example (2025/26): Rachel earns £60,000, donates £4,000 to charity. Without Gift Aid understanding: Rachel: £60,000 - £12,570 = £47,430 taxable. Basic rate band: £37,700 @ 20% = £7,540. Higher rate: £47,430 - £37,700 = £9,730 @ 40% = £3,892. Total tax: £7,540 + £3,892 = £11,432. Donation: £4,000 (no tax relief claimed). With Gift Aid (higher rate relief): Rachel donates £4,000. Charity claims Gift Aid: £4,000 ÷ 0.8 = £5,000 gross donation. Gift Aid extends Rachel's basic rate band by £5,000: New basic rate limit: £50,270 + £5,000 = £55,270. Rachel's income: £60,000. Taxable: £47,430 (same). But now: £37,700 + £5,000 = £42,700 @ 20% = £8,540. Higher rate: £47,430 - £42,700 = £4,730 @ 40% = £1,892. Total tax: £8,540 + £1,892 = £10,432. Tax saved: £11,432 - £10,432 = £1,000! Rachel donated £4,000, saved £1,000 tax = real cost £3,000 (charity got £5,000!). Additional rate (45%) saves even more: Donate £10,000, charity gets £12,500. Tax relief: £12,500 × 25% = £3,125. Real cost: £10,000 - £3,125 = £6,875 (charity got £12,500!). Action: Always tick Gift Aid, claim higher/additional rate relief via Self Assessment, consider regular giving to maximize band extension.
7. Tax-Efficient Dividend Extraction (Company Directors) - Pay 8.75% Instead Of 33.75% On Dividends, Save £5,000+ On £20,000 Withdrawn
How it works: Company directors can take income as salary + dividends (instead of all salary). Dividends taxed at lower rates than salary: Basic rate: 8.75% (vs 20% income tax + 12% NI = 32%). Higher rate: 33.75% (vs 40% + 2% = 42%). Plus: dividends don't pay NI (save 8-15%). Optimal mix: Salary up to NI threshold (£12,570) + rest as dividends. Real UK example (2025/26): Alex is company director, wants £50,000 income. Strategy 1 (all salary): Salary: £50,000. Income tax: £7,486 (£37,430 @ 20% = £7,486). Employee NI: £2,994 ((£50,000 - £12,570) = £37,430 @ 8% = £2,994). Employer NI: (£50,000 - £5,000) = £45,000 @ 15% = £6,750. Total cost to company: £50,000 + £6,750 = £56,750. Alex receives: £50,000 - £7,486 - £2,994 = £39,520 net. Strategy 2 (optimal salary + dividends): Salary: £12,570 (= Personal Allowance, 0% income tax, 0% employee NI, no employer NI up to Employment Allowance £5,000). Dividends: £50,000 - £12,570 = £37,430. Dividend tax: First £500 = £0 (Dividend Allowance). Remaining: £36,930 @ 8.75% (basic rate, Alex still under £50,270 total) = £3,231. Alex receives: £12,570 salary + £37,430 dividends - £3,231 tax = £46,769 net. vs all salary £39,520. Alex gains: £46,769 - £38,022 = £8,747/year! Company saves employer NI too! Action: Directors take salary at Personal Allowance or NI threshold, extract rest as dividends up to basic rate band (£50,270 total), use Dividend Allowance (£500), pay 8.75% on rest.
7 Costly UK Tax Mistakes (2025/26) - Avoid Losing £1,000-£15,000+/Year In Overpaid Tax
Common errors costing UK taxpayers thousands every year. Learn from others' expensive mistakes - updated January 2025.
1. Not Using Full Personal Allowance (£12,570) - Lose £2,514/Year Tax Relief By Earning Under Threshold
The mistake: Not earning enough to use full Personal Allowance while spouse pays higher rate tax. Example: Wife earns £8,000, husband earns £60,000. Wife wastes £4,570 allowance (£12,570 - £8,000), could transfer £1,260 via Marriage Allowance = save £252. Or wife could do side work to use full allowance = earn extra £4,570 @ 0% tax! Real UK example: Lisa earns £7,000/year part-time, husband Tom earns £70,000. Lisa has £5,570 unused allowance (£12,570 - £7,000). Option 1: Lisa claims Marriage Allowance, transfers £1,260 to Tom = saves £252/year. Option 2: Lisa takes on freelance work earning £5,000 extra. Total: £12,000 (still under £12,570). Extra income: £5,000 @ 0% tax = £5,000 take-home! Tom still higher rate, but Lisa uses allowance. Even better Option 3: Lisa earns extra £5,000, claims Dividend Allowance £500 + Trading Allowance £1,000 on side income = earn up to £14,070 @ 0% tax total! Mistake cost: £5,000+ potential tax-free income lost by not using allowance. Fix: Always aim to use full Personal Allowance if possible, transfer unused portion via Marriage Allowance if applicable, consider side income to utilize allowance fully.
2. Wrong Tax Code All Year (Emergency 1257L W1/M1) - Overpay £1,000-£5,000 By Not Checking HMRC Tax Code
The mistake: Starting new job and being put on emergency tax code (1257L W1/M1 or 1257L M1) without checking. Emergency codes don't give credit for cumulative allowances = overpay tax all year! 6 million UK workers have wrong tax code! Real UK example (2025/26): Ben starts new job in July paying £30,000/year (£2,500/month). Employer doesn't get P45 from previous job, uses emergency code 1257L M1. Correct code (1257L cumulative): Annual salary: £30,000. Annual allowance: £12,570. Taxable: £17,430 @ 20% = £3,486/year = £290/month. Month 1 (July): Should pay £290. Emergency code M1 (month 1 basis): Monthly allowance: £12,570 ÷ 12 = £1,047.50. Monthly income: £2,500. Taxable: £2,500 - £1,047.50 = £1,452.50 @ 20% = £290.50/month. Seems same? But... Ben started in July (month 4 of tax year, which runs April-April). With cumulative code: Ben's cumulative allowance by July: £1,047.50 × 4 = £4,190. Ben only worked 1 month in current tax year, so tax calculated on whole year basis, spread over remaining months. With M1 emergency: Ignores that Ben has unused allowance from April-June! Calculates tax ONLY on July earnings vs July allowance. If Ben had gap in employment April-June, he LOSES those months' allowances! Typical scenario: Ben unemployed April-June, starts July. Under cumulative code: Would get full £12,570 allowance spread over July-March (9 months) = higher monthly allowance, pay less tax initially to "catch up" unused allowance from April-June. Under M1 emergency: Only gets £1,047.50/month allowance, loses April-June allowances completely! Overpayment: £1,047.50 × 3 months × 20% = £629! Plus if Ben changes jobs multiple times, emergency codes each time = major overpayment! Fix: Check tax code immediately when starting new job (on payslip, or GOV.UK Personal Tax Account), if emergency code (W1, M1, or no code), call HMRC to correct (0300 200 3300), claim refund via P800 or Self Assessment.
3. Paying Tax On Savings Interest Under Personal Savings Allowance - Overpay £200-£1,000/Year By Declaring Tax-Free Interest
The mistake: Thinking all savings interest is taxable and declaring it on Self Assessment, when Personal Savings Allowance (PSA) makes first £1,000 (basic rate) or £500 (higher rate) tax-free! Real UK example (2025/26): Sophie is basic rate taxpayer (£35,000 salary), earns £800 savings interest. Mistake: Sophie files Self Assessment, adds £800 interest as "other income," pays tax: £800 × 20% = £160. Correct: PSA = £1,000 for basic rate. Sophie's £800 interest is FULLY covered by PSA = £0 tax owed! Sophie overpaid: £160. Higher rate example: Mark earns £65,000, gets £450 interest. PSA (higher rate): £500. Mark's £450 fully covered = £0 tax. But Mark declares on Self Assessment and pays: £450 × 40% = £180 overpaid! Additional rate (£125K+): No PSA (£0), but many don't realize and think all interest taxed. If earning £130,000 with £2,000 interest, should pay: £2,000 × 45% = £900. If not declared, HMRC issues penalty! Common scenarios: 1) Basic rate with £900 interest: £0 tax (PSA £1,000 covers). 2) Higher rate with £1,200 interest: Tax on £700 only (£1,200 - £500 PSA) @ 40% = £280. 3) Additional rate with any interest: All taxable @ 45%. Fix: Check if interest is under PSA before declaring, don't pay tax on PSA-covered interest, if already paid, claim refund via P800 or Self Assessment amendment.
4. Not Claiming Marriage Allowance (2.4 Million Eligible Couples!) - Miss £252/Year, Lose £1,008 Backdate Lump Sum
The mistake: Being eligible for Marriage Allowance (one spouse earns under £12,570, other is basic rate) but not claiming. 2.4 million UK couples eligible but not claiming = losing £252/year each = £600 million total unclaimed! Real UK example (2025/26): James earns £38,000, wife Sarah earns £9,000. Eligible: Sarah under £12,570 , James basic rate . Without claim: James tax: £5,086. Sarah tax: £0. Total: £5,086. With claim: Sarah transfers £1,260 to James. James new allowance: £13,830. James tax: £4,834. Saved: £252/year. Plus backdate 4 years: If eligible since 2020 but never claimed, can backdate: £252 × 4 = £1,008 lump sum! Common reasons people don't claim: 1) Don't know it exists (not automatic!). 2) Think it's not worth the hassle (takes 5 minutes online!). 3) Assume already applied (HMRC doesn't auto-apply!). 4) One spouse doesn't work, assume not eligible (if earn anything under £12,570, still eligible!). Sarah earns £0? Still eligible! Her full £1,260 can transfer. Mistake cost: £252/year ongoing + £1,008 missed backdate = £1,260 total loss if not claimed in 2024. Fix: Apply at GOV.UK Personal Tax Account (takes 5 mins), automatically renews each year, benefit paid through tax code, backdate 4 tax years if eligible.
5. Missing Self Assessment Deadline (31 January) - Pay £100-£1,600+ Penalties Plus Interest On Late Tax
The mistake: Missing Self Assessment filing deadline (31 January online, 31 October paper) or payment deadline (31 January). Penalties escalate fast! Penalty structure (2025/26): 1 day late: £100 fixed penalty (even if no tax owed!). 3 months late: £10/day (max 90 days = £900). 6 months late: £300 or 5% of tax (whichever higher). 12 months late: Another £300 or 5% of tax. Plus interest on unpaid tax (currently 7.75%/year). Real UK example: Amy owes £5,000 tax, files 8 months late, pays 8 months late. Penalties: £100 (1 day late) + £900 (90 days @ £10/day) + £300 (6 months late) = £1,300. Interest: £5,000 × 7.75% × 8/12 months = £258. Total: £1,300 penalties + £258 interest = £1,558 extra on top of £5,000 tax! Amy pays £6,558 total instead of £5,000 = 31% more! Even if Amy owed £0 tax: Still pays £100 + £900 = £1,000 penalties for late filing! Worse scenario (12+ months late): Penalties: £100 + £900 + £300 + £300 = £1,600 minimum. If tax owed is high, 5% penalties could be £1,000s more! Common reasons for missing: 1) Forget to register by 5 October (if newly self-employed). 2) Think extension available (not for UK Self Assessment!). 3) Wait for all documents (file on time with estimates, amend later if needed). 4) Assume HMRC will remind (they send ONE reminder, easy to miss!). Fix: Set calendar reminders (5 Oct registration, 31 Jan filing & payment), file early (Dec/Jan) not last minute, if can't pay full amount, set up Time to Pay arrangement BEFORE 31 Jan (avoid penalties), register for Self Assessment immediately when become self-employed/landlord/high income.
6. Not Using ISA Allowance (£20,000/Year) - Pay 40% Tax On £20,000 Gains = £8,000 Lost Tax-Free Growth Over Time
The mistake: Investing outside ISA (in regular savings/trading accounts) and paying tax on all interest/dividends/capital gains, when could be 100% tax-free in ISA! Real UK example (2025/26): Dan has £100,000 to invest, puts in regular investment account (not ISA). Growth over 10 years @ 7%: £196,715 (profit £96,715). Tax paid during growth: Dividends ~£7,000/year, tax @ 33.75% (higher rate, above £500 allowance) = £2,250/year × 10 = £22,500. Capital gain when sold: £96,715 - £3,000 allowance = £93,715 @ 24% = £22,492 CGT. Total tax: £22,500 + £18,743 = £41,243! Dan keeps: £196,715 - £41,243 = £155,472 after tax. If Dan used ISA: Same £100,000, same 7% growth = £196,715. Tax: £0. Dan keeps: £196,715 (full amount!). Dan lost: £41,243 by not using ISA! Worse over 20 years: £100,000 @ 7% = £386,968 (profit £286,968). Tax outside ISA: ~£90,000-£120,000 depending on dividend/growth split. ISA tax: £0. Even with smaller amounts: £20,000 (max annual ISA) @ 7% over 20 years = £77,379. Outside ISA: pay ~£12,000-£18,000 tax on growth. ISA: £0 tax. Fix: Open Stocks & Shares ISA immediately, transfer existing investments (sell outside ISA, rebuy inside ISA - watch for CGT on sale!), use full £20,000 allowance every year (resets 6 April), prioritize ISA over regular savings/investment accounts.
7. Overpaying Tax On Dividends (Company Directors) - Pay 33.75% Instead Of 8.75% By Taking All Salary = £5,000+ Overpaid On £20K
The mistake: Company directors taking all income as salary (paying 20-40% income tax + 8-15% NI) instead of optimal salary + dividends mix (dividends at 8.75-33.75%, no NI!). Real UK example (2025/26): Claire is company director, wants £45,000 income. Strategy 1 (all salary - MISTAKE): Salary: £45,000. Income tax: £6,486 ((£45,000 - £12,570) × 20% = £6,486). Employee NI: £2,594 ((£45,000 - £12,570) = £32,430 @ 8% = £2,594). Employer NI: (£45,000 - £5,000) = £40,000 @ 15% = £6,000. Total cost to company: £45,000 + £6,000 = £51,000. Claire receives: £45,000 - £6,486 - £2,594 = £35,920 net. Strategy 2 (optimal - salary + dividends): Salary: £12,570 (Personal Allowance, 0% tax, 0% employee NI). Dividends: £32,430. Dividend tax: £500 @ 0% (Dividend Allowance). £31,930 @ 8.75% (basic rate) = £2,794. Employer NI on £12,570 salary: £12,570 - £5,000 = £7,570 @ 15% = £1,136, but Employment Allowance £10,500 covers this, so effectively £0. Cost to company: £12,570 + £32,430 + £0 NI = £45,000 total. Claire receives: £12,570 + £32,430 - £2,794 = £42,206 net. Claire gains: £42,206 - £35,920 = £6,286/year by using dividends! Company saves: £4,954 - £0 = £4,954 employer NI! Mistake cost: £7,584/year overpaid tax by using all salary! Fix: Company directors take salary at Personal Allowance (£12,570) or NI threshold, extract remaining income as dividends up to basic rate band (£50,270 total income), use Dividend Allowance (£500), pay 8.75% on rest, avoid higher rate dividends (33.75%) by spreading income across tax years or using pension contributions.
6 Official UK Tax Resources - Government & Expert Sources For Accurate 2025/26 Tax Information
Authoritative UK tax guidance from HMRC, GOV.UK, and trusted tax experts. Updated January 2025.
GOV.UK Personal Tax Account
Essential HMRC online portal to manage all tax affairs. Check tax code (instantly see if wrong code applied, 6 million UK workers overpay due to incorrect codes!), view PAYE tax paid this year (see exactly how much deducted each month), track Self Assessment deadlines and payments, claim Marriage Allowance (transfer 10% personal allowance to spouse, save £252/year, backdate 4 years = £1,008 lump sum), check State Pension forecast, update employment details (new job, change of hours, second income, benefits), claim tax refunds (P800 overpayments shown here, click to claim - 4.5 million taxpayers owed refunds!), view tax credits and Child Benefit, update address and contact info, estimate next year's tax (plan ahead), download tax documents (P60, P45, SA302). Sign in with Government Gateway ID or GOV.UK One Login. Takes 5-10 minutes to set up, saves hours dealing with HMRC by phone!
HMRC Tax Rates & Allowances
Official HMRC page with current and historical UK tax rates. 2025/26 rates: Personal Allowance £12,570 (tapers £100K-£125,140, fully withdrawn at £125,140 creating 60% marginal rate trap!), Basic rate 20% on £12,571-£50,270, Higher rate 40% on £50,271-£125,140, Additional rate 45% on £125,141+. National Insurance rates: Employees 8% on £12,571-£50,270, 2% above £50,270 (reduced from 12% to 8% via Jan+Apr 2024 cuts!). Self-employed Class 4: 6% on £12,570-£50,270, 2% above. Personal Savings Allowance: £1,000 (basic rate) / £500 (higher) / £0 (additional). Dividend Allowance: £500 (down from £1,000 in 2023/24, £2,000 in 2022/23!). Capital Gains Tax allowance: £3,000 (reduced from £6,000 in 2023/24!). Dividend tax rates: 8.75% basic, 33.75% higher, 39.35% additional. Scotland has different income tax bands and rates! Marriage Allowance: £1,260 transfer (10% of Personal Allowance). Pension Annual Allowance: £60,000. ISA allowance: £20,000. Trading/Property Allowances: £1,000 each. Blind Person's Allowance: £3,070. Check annually - rates change!
GOV.UK Self Assessment
Complete guide to UK Self Assessment tax returns. Who must file: Self-employed (income over £1,000), partnerships, company directors with dividends/salary over £100K, income over £100K (lose Personal Allowance), rental income over £2,500/year (or £1,000 Property Allowance), capital gains above allowance (£3,000), foreign income over £2,000, untaxed income (savings interest, dividends). Key deadlines: 5 October - register if newly self-employed/need to file. 31 October - paper return deadline. 31 January - online return deadline + payment deadline + first payment on account. 31 July - second payment on account. Penalties for late filing: 1 day late = £100, 3 months = £10/day (max £900), 6 months = £300 or 5% tax, 12 months = another £300 or 5% tax. How to file: Register for Self Assessment (get Unique Taxpayer Reference), gather records (income, expenses, P60, P45, dividend vouchers, bank statements), file online using HMRC portal or commercial software, pay tax owed by 31 Jan. Payments on account: If owe over £1,000, pay twice yearly (31 Jan + 31 Jul) = 50% of last year's tax each. Set up Time to Pay if can't pay full amount (call before 31 Jan to avoid penalties!). Claim expenses if self-employed (office costs, travel, equipment, professional fees). Get SA302 tax calculation for mortgage applications.
HMRC Tax Codes Guide
Official HMRC guide to understanding UK tax codes on payslips. Common codes: 1257L = standard code (Personal Allowance £12,570, most common code for 2025/26). 1257L W1/M1 or 1257L M1 = emergency tax (month 1 basis, doesn't use cumulative allowances, causes overpayment!). BR = all income taxed at basic rate 20% (no allowance, used for second jobs). D0 = all income at higher rate 40% (no allowance). D1 = all income at additional rate 45%. 0T = no allowances (often used if over £125,140, Personal Allowance fully withdrawn). NT = no tax deducted (rare, usually tax-exempt income). K codes (e.g., K500) = negative allowance (owe tax from previous years, company benefits exceed allowance). S prefix (e.g., S1257L) = Scottish tax rates apply (different bands!). C prefix = Welsh tax rates. How codes work: Number = tax-free amount ÷ 10. So 1257L = £12,570 allowance ÷ 10 = 1257. Letter indicates allowance type (L = basic Personal Allowance, most common). Emergency codes happen when: new job without P45, new job mid-year, receiving State Pension, returning to work after break, second job started. If emergency code (W1/M1/M1): Call HMRC immediately (0300 200 3300), provide P45 to employer, check Personal Tax Account for code updates, claim refund if overpaid (P800 or Self Assessment). Wrong code costs £1,000s/year in overpaid tax! Check payslip every month, verify code matches Personal Tax Account, call HMRC if incorrect.
Citizens Advice Tax Help
Free, independent UK tax advice in plain English from Citizens Advice charity. Covers: Income tax basics (how tax works, what's taxable, allowances and reliefs, tax rates 2025/26), PAYE problems (wrong tax code, emergency tax, tax refunds, P800 overpayments, changing jobs mid-year, multiple jobs), Self Assessment help (who must file, how to register, filling in tax return, paying tax owed, payment plans, penalties and appeals, expenses and allowances), Tax credits and benefits (Working Tax Credit, Child Tax Credit, Universal Credit, how tax affects benefits, reporting income changes), National Insurance (NI numbers, Class 1/2/4 contributions, NI credits, State Pension), Tax disputes (challenging HMRC decisions, penalties, payment demands, deadlines), Debt and tax problems (can't pay tax bill, Time to Pay arrangements, debt relief, enforcement action). Also covers: Council Tax (reductions, discounts, appeals, arrears), Stamp Duty, Inheritance Tax, Capital Gains Tax, tax on savings and investments, tax for under-19s, tax in Scotland/Wales. Free helpline: 0800 144 8848 (England), 0800 702 2020 (Wales). Free live chat on website. Local Citizens Advice offices for face-to-face appointments. No judgment, confidential, impartial advice. Great for people who find HMRC confusing or intimidating - explains tax in everyday language!
HMRC Tax Helpline: 0300 200 3300
Direct phone line to HMRC for UK income tax queries. Open Monday-Friday 8am-6pm (closed weekends and bank holidays). Use for: checking tax code is correct (call if emergency code W1/M1 applied, or code seems wrong), reporting change of circumstances (new job, second job, benefits changed, moved address), claiming tax refunds (if owed money and not received P800), setting up Self Assessment (register for UTR, filing queries, payment plans), chasing P60/P45/P800 documents, updating Personal Allowance claims (Marriage Allowance, Blind Person's Allowance), querying tax bills or demands, reporting PAYE problems (underpaid/overpaid tax, incorrect deductions). Have ready: National Insurance number, UTR if self-employed, employer PAYE reference, recent payslips, P60/P45 if available. Wait times: Usually 10-30 minutes (call early morning or late afternoon for shorter waits, avoid Monday mornings and January-February Self Assessment rush!). Alternatives: Personal Tax Account online (faster for most queries, 24/7 access), HMRC webchat (available 8am-6pm Mon-Fri), post to HMRC (slower, 15 working days response time). TIP: Use Personal Tax Account first - most issues (wrong tax code, view tax, claim refunds) solved online without calling!
Frequently Asked Questions
1. What are the UK income tax rates for 2025/26?
For 2025/26: Basic rate 20% on income £12,571-£50,270, Higher rate 40% on £50,271-£125,140, Additional rate 45% on income over £125,140. Different rates apply in Scotland.
2. How do I calculate my income tax?
Calculate income tax by applying tax rates to income bands: First £12,570 = £0 tax, Next £37,700 = 20% tax (£7,540), Next £74,870 = 40% tax, Above £125,140 = 45% tax.
3. What is a tax code and how does it work?
A tax code tells your employer how much tax to deduct. Common code is 1257L (personal allowance £12,570). The number is your tax-free amount divided by 10. L means entitled to basic personal allowance.
4. When do I need to complete a Self Assessment tax return?
You need to complete Self Assessment if you're self-employed, earn over £100,000, receive untaxed income, or receive income from property or investments. Deadline is 31 January following tax year.
5. How does the £100,000 personal allowance taper work?
If you earn over £100,000, your personal allowance reduces by £1 for every £2 earned above this threshold. At £125,140+ you have no personal allowance, creating an effective 60% tax rate on income £100,000-£125,140.
Embed This Calculator on Your Website
Free to use. Copy the code below and paste it into your website HTML.
Official Sources
How to Use This Tax Calculator
Follow these five simple steps to calculate your UK income tax for the 2025/26 tax year:
- Enter your gross annual income — Type your total salary or earnings before any deductions into the income field. This should be your full annual gross pay, including any bonuses or overtime.
- Select the tax year (2025/26) — Make sure the 2025/26 tax year is selected to use the latest HMRC rates and thresholds. Previous tax years are also available for comparison.
- Choose your employment type — Select whether you are employed (PAYE), self-employed, or a director. This affects how National Insurance contributions are calculated.
- Review your tax bands breakdown — The calculator shows exactly how much of your income falls into each tax band (Personal Allowance, Basic Rate 20%, Higher Rate 40%, Additional Rate 45%), so you can see where every penny goes.
- Understand your effective tax rate — Your effective tax rate is the overall percentage of your gross income paid in tax. This is usually lower than your highest marginal rate because only the portion of income within each band is taxed at that rate.
Worked Examples: UK Tax Calculations for 2025/26
These examples use official 2025/26 HMRC tax bands to show exactly how income tax is calculated at different salary levels.
Example 1: £30,000 Salary
| Gross Income | £30,000 |
| Personal Allowance (tax-free) | £12,570 |
| Taxable Income | £17,430 |
| Basic Rate (20%) | £17,430 × 20% = £3,486 |
| Total Income Tax | £3,486 |
| Effective Tax Rate | 11.6% |
All taxable income falls within the basic rate band, so the entire £17,430 is taxed at 20%.
Example 2: £55,000 Salary
| Gross Income | £55,000 |
| Personal Allowance (tax-free) | £12,570 |
| Taxable Income | £42,430 |
| Basic Rate (20%) | £37,700 × 20% = £7,540 |
| Higher Rate (40%) | £4,730 × 40% = £1,892 |
| Total Income Tax | £9,432 |
| Effective Tax Rate | 17.1% |
The first £37,700 of taxable income is taxed at 20% (basic rate), and the remaining £4,730 is taxed at 40% (higher rate).
Example 3: £85,000 Salary
| Gross Income | £85,000 |
| Personal Allowance (tax-free) | £12,570 |
| Taxable Income | £72,430 |
| Basic Rate (20%) | £37,700 × 20% = £7,540 |
| Higher Rate (40%) | £34,730 × 40% = £13,892 |
| Total Income Tax | £21,432 |
| Effective Tax Rate | 25.2% |
A larger portion of income now falls into the higher rate band (£34,730 at 40%), which significantly increases the effective tax rate compared to lower salaries.
Example 4: £120,000 Salary — The 60% Marginal Rate Trap
| Gross Income | £120,000 |
| Standard Personal Allowance | £12,570 |
| PA Reduction (income over £100K) | (£120,000 − £100,000) ÷ 2 = £10,000 reduction |
| Reduced Personal Allowance | £12,570 − £10,000 = £2,570 |
| Taxable Income | £120,000 − £2,570 = £117,430 |
| Basic Rate (20%) | £37,700 × 20% = £7,540 |
| Higher Rate (40%) | £79,730 × 40% = £31,892 |
| Total Income Tax | £39,432 |
| Effective Tax Rate | 32.9% |
For every £2 earned over £100,000, your Personal Allowance is reduced by £1. This means you lose £1 of tax-free allowance for every £2 of additional income. The combined effect is a 60% marginal tax rate on income between £100,000 and £125,140: 40% income tax on the extra earnings, plus 40% tax on the allowance you lose (which effectively equals an additional 20%). This trap affects all earners between £100,000 and £125,140, at which point the Personal Allowance is fully withdrawn.
Sources & Methodology
This calculator uses official HMRC tax rates and thresholds for the 2025/26 tax year (6 April 2025 to 5 April 2026). All calculations follow the standard UK income tax rules for England, Wales, and Northern Ireland.
Official HMRC References
2025/26 Income Tax Bands
| Tax Band | Rate | Income Range |
|---|---|---|
| Personal Allowance | 0% | Up to £12,570 |
| Basic Rate | 20% | £12,571 – £50,270 |
| Higher Rate | 40% | £50,271 – £125,140 |
| Additional Rate | 45% | £125,141+ |
Disclaimer: This calculator provides estimates based on official HMRC rates for the 2025/26 tax year. It is intended for informational purposes only and does not constitute financial or tax advice. Your actual tax liability may differ depending on your individual circumstances, additional income sources, pension contributions, and other tax reliefs. For personalised advice, consult a qualified tax professional or accountant.