UK Tax Thresholds 2025/26 — Complete Guide

Complete guide to UK tax thresholds 2025/26 — income tax, NI, dividend, savings, CGT, IHT, child benefit, student loan.

Quick answer: Key UK tax thresholds 2025/26: Personal Allowance £12,570, 40% kicks in at £50,270, 45% at £125,140. NI 8% above £12,570, 2% above £50,270. Child Benefit charge starts £60,000. Student Loan Plan 2 £28,470.
Mustafa Bilgic
Reviewed by Mustafa Bilgic · UK Calculator Editor ·

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There are over 30 separate tax thresholds to navigate in the UK 2025/26 system — each with its own cliff edge, marginal rate, and quirks. This is the complete reference, every figure cross-checked against HMRC primary sources.

How uk tax thresholds 2025/26 — complete guide works in 2025/26

Income Tax (England, Wales, NI):

  • Personal Allowance: £12,570 (tapers above £100k)
  • Basic Rate (20%): £12,571 – £50,270
  • Higher Rate (40%): £50,271 – £125,140
  • Additional Rate (45%): £125,141+

National Insurance (employees, Class 1):

  • Primary Threshold: £12,570 (NI starts)
  • Upper Earnings Limit: £50,270 (NI drops to 2%)
  • Main rate: 8% (PT–UEL); 2% above UEL

Dividends & Savings:

  • Dividend Allowance: £500 (down from £1,000 in 2024/25)
  • Personal Savings Allowance: £1,000 basic / £500 higher / £0 additional rate
  • Starting Savings Rate: £5,000 (taper if earnings > £12,570)

Capital Gains Tax: Annual exempt amount £3,000 (down from £6,000 in 2024/25). Rates: 18%/24% on residential property, 18%/24% on other gains.

Inheritance Tax: Nil-rate band £325,000; Residence Nil-Rate Band £175,000; both frozen through April 2028.

Child Benefit High Income Charge: begins at adjusted net income £60,000, full claw-back at £80,000.

Student Loans 2025/26: Plan 1 £26,065 (9%), Plan 2 £28,470 (9%), Plan 4 £32,745 (9%), Plan 5 £25,000 (9%), Postgrad £21,000 (6%).

Worked example: £25,000 — basic rate only

Below 40% threshold; below NI UEL; below Plan 2 threshold (no SL repayment).

Gross: £25,000 → Take-home: £21,519.60/year (£1,793.30/month)

Worked example: £60,000 — multi-threshold zone

Above 40% (£9,730 in higher rate). Full NI; Plan 2 SL £2,837.70 (9% × £31,530). Take-home £39,629.70 if SL Plan 2.

Gross: £60,000 → Take-home: £45,357.40/year (£3,779.78/month)

Worked example: £110,000 — PA taper + Child Benefit charge + 60% trap

PA reduced to £7,570 (lose £5,000 PA). Effective marginal 60%. If 2 kids = full Child Benefit clawback.

Gross: £110,000 → Take-home: £72,357.40/year (£6,029.78/month)

Frequently asked questions

Are any UK tax thresholds rising in 2025/26?
Most are frozen. Exceptions: state pension up 4.1% triple lock; National Living Wage up 6.7% to £12.21/hour; alcohol/tobacco duties uprated. Income tax + NI thresholds frozen through April 2028.
What is the most punishing UK tax cliff?
The £100k–£125,140 PA taper, creating a 60% marginal income tax rate (62% with NI). Pension contributions in this band give 60% effective relief — by far the highest.
When does Child Benefit start being clawed back?
From April 2024, the High Income Child Benefit Charge starts at adjusted net income £60,000 (was £50,000). Full clawback at £80,000. Government plans to switch to household-based assessment by 2026/27 but not yet legislated.
What's the difference between personal allowance and personal savings allowance?
Personal Allowance (£12,570) covers ALL income — earnings, savings, dividends. Personal Savings Allowance (£1,000 basic / £500 higher) is ON TOP, exclusive to savings interest. Both are separate from the £500 Dividend Allowance.
What is the dividend allowance for 2025/26?
£500 — halved from £1,000 in 2024/25. So basic rate taxpayers can receive £500 dividend tax-free; above that 8.75% (basic), 33.75% (higher), 39.35% (additional rate).
What is the inheritance tax nil-rate band 2025/26?
£325,000 standard nil-rate band + £175,000 residence nil-rate band (RNRB) if leaving a home to direct descendants. Combined £500,000 per person, £1m per couple. Both frozen until April 2028.
Are student loan thresholds the same UK-wide?
No — Scottish Plan 4 (£32,745) is higher than English/Welsh Plan 2 (£28,470). Plan 5 (post-Aug 2023 starters) £25,000 is the lowest. Postgrad £21,000 stacks on top of any undergrad plan.

Official UK Sources

Last reviewed: May 2026 against HMRC 2025/26 rates.

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