UK Tax Thresholds 2026/27

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Income Tax Thresholds 2026/27 Current Year

UK income tax thresholds for 2026/27 are identical to 2025/26 — £12,570 tax-free, 20% up to £50,270, 40% from £50,271 to £125,140, then 45% above. These bands are frozen until 2028 (now extended to 2030/31), so more of your pay rise gets taxed each year. The system is progressive, meaning you only pay each higher rate on the income above that threshold — not on your whole salary.

Personal Allowance taper: If your income exceeds £100,000, your personal allowance is reduced by £1 for every £2 of income above £100,000. It reaches £0 at £125,140, creating an effective 60% marginal rate in this range.

National Insurance Thresholds 2026/27

National Insurance contributions are separate from income tax but also deducted from your pay. Here are the key NI thresholds for employees and employers.

Employee NI (Class 1)

Employees pay 8% National Insurance on earnings between the Primary Threshold (£12,570/year) and the Upper Earnings Limit (£50,270/year), then 2% on everything above. Below the Lower Earnings Limit (£6,396/year) no NI is due, but contributions are credited towards your State Pension entitlement. The 8% main rate was reduced from 12% in January 2024 and again from 10% in April 2024, saving a full-time median earner roughly £450 per year compared to the old 12% rate.

Employer NI (Class 1)

Employers pay 15% NI on each employee's earnings above the Secondary Threshold of £5,000/year. This threshold was reduced sharply from £9,100 in 2024/25, increasing employer costs — particularly for businesses with many lower-paid staff. To partly offset the impact, the Employment Allowance was doubled to £10,500 for 2026/27 (from £5,000), and the previous £100,000 turnover cap was removed so all eligible employers can claim regardless of size.

Other Tax Allowances & Thresholds 2026/27

Beyond income tax and NI, there are numerous thresholds affecting your finances. Here is a comprehensive list of the key figures.

Personal & Marriage Allowances

The standard Personal Allowance remains £12,570. If you are married or in a civil partnership and one partner earns below the Personal Allowance, the Marriage Allowance lets you transfer up to £1,260 to the higher earner, saving up to £252 in tax. The Blind Person's Allowance adds £3,070 to your tax-free amount. The Married Couple's Allowance (for those born before 6 April 1935) ranges from £4,280 to £11,080.

Savings, Dividends & Capital Gains

Basic-rate taxpayers receive a £1,000 Personal Savings Allowance (£500 for higher-rate taxpayers; additional-rate taxpayers receive none). The Dividend Allowance is £1,000 for 2026/27. The Capital Gains Tax Annual Exempt Amount remains at £3,000. You can save up to £20,000 per year in ISAs (including up to £4,000 in a Lifetime ISA) with all gains and interest tax-free.

Pensions

The Annual Allowance for pension contributions is £60,000, meaning you can contribute up to this amount each year with tax relief. If you have already accessed your pension flexibly, the Money Purchase Annual Allowance limits further contributions to £10,000. For high earners, the tapered Annual Allowance begins when adjusted income exceeds £260,000, reducing the allowance to a minimum of £10,000. The tax-free Lump Sum Allowance (replacing the old Lifetime Allowance) is £268,275.

Student Loan Repayment Thresholds

Student loan repayments are deducted at 9% of earnings above the relevant threshold: Plan 1 (pre-2012 starters) begins at £24,990, Plan 2 (post-2012) at £27,295, Plan 4 (Scotland) at £31,395, and Plan 5 (from September 2023) at £25,000. Postgraduate Loan repayments are 6% of earnings above £21,000. All deductions are made through PAYE alongside tax and NI.

Why Frozen Thresholds Cost You More Each Year

Since 2021/22, the Personal Allowance and higher-rate threshold have been frozen at the same cash values. With wages and prices rising, this policy — known as fiscal drag — quietly increases the amount of tax you pay without any headline rate change.

Here is how it works: if your salary rises with inflation but the tax-free amount stays at £12,570, a larger share of your income falls into taxable bands. Someone earning £30,000 in 2021 paid basic-rate tax on £17,430. If their salary has risen to £33,000 by 2026/27, they now pay basic-rate tax on £20,430 — an extra £3,000 taxed at 20%, costing an additional £600 per year in income tax alone.

The freeze was originally set to end in April 2026, then extended to April 2028. Forecasts from the Office for Budget Responsibility suggest thresholds may remain frozen beyond that — the Autumn Budget 2024 indicated a freeze continuing until at least 2029/30. The practical effect is that each pay rise you receive is taxed more heavily than it would be if thresholds kept pace with inflation, and more workers are being pulled into the higher-rate band each year.

To see exactly how much tax you pay at your current salary, enter your figure into the calculator at the top of this page.

Scotland's Different Income Tax Rates

If you live in Scotland, you pay Scottish income tax rates set by the Scottish Parliament rather than the UK-wide rates shown above. Scottish taxpayers are identified by an ‘S’ prefix on their PAYE tax code (for example, S1257L).

Scotland operates six income tax bands compared to England, Wales and Northern Ireland's three. These include a starter rate (19%), Scottish basic rate (20%), intermediate rate (21%), higher rate (42%), advanced rate (45%), and top rate (48%). The thresholds for each band differ from the rest of the UK, meaning Scottish taxpayers on the same gross salary may pay different amounts of income tax.

For most earners below approximately £28,000, the difference is small. Above that level, Scottish taxpayers typically pay slightly more income tax due to the intermediate and higher rates starting at lower thresholds. However, all UK taxpayers share the same National Insurance thresholds and rates regardless of where they live.

For exact Scottish tax calculations, use our Tax Calculator which applies the correct rates based on your location, or check the official GOV.UK Scottish Income Tax page for current band details.

Tax Threshold Changes: 2024/25 vs 2026/27

Most income tax thresholds remain frozen for 2026/27. The main change is to employer National Insurance. Here is a full comparison.

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Tax Bracket Calculator | Salary Calculator | Tax Calculator | NI Calculator | Pension Calculator | UK Tax Rates

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