UK Tax Rates & Bands 2025/26

Income Tax Bands 2025/26 — England, Wales & Northern Ireland

The income tax rates and bands that apply across England, Wales and Northern Ireland for the 2025/26 tax year (running from 6 April 2025 to 5 April 2026) are set out below. Scotland has its own distinct rate structure, covered further down this page.

Source: HMRC — Income Tax rates and Personal Allowances (GOV.UK)

Dividend Tax Rates 2025/26

If you receive dividend income from shares or as a company director, you pay dividend tax at rates that differ from standard income tax. The first £500 of dividend income each year is tax-free under the Dividend Allowance. Any dividends above this are taxed at the following rates:

Source: HMRC — Tax on dividends (GOV.UK)

Year-on-Year Comparison: 2025/26 vs 2025/26

The table below compares the key income tax thresholds, allowances and rates between the current and previous tax years. Most thresholds remain frozen, but some important changes have taken effect.

Source: HMRC — Rates and allowances for Income Tax (GOV.UK)

Personal Allowance Explained

Every UK resident is entitled to a Personal Allowance — a slice of income on which no tax is charged at all. For 2025/26, this figure stands at £12,570. It applies regardless of whether you live in England, Wales, Northern Ireland or Scotland.

How the £100K Taper Works

The £100K Tax Trap: When your income exceeds £100,000, your Personal Allowance reduces by £1 for every £2 earned above this threshold. This creates an effective 60% marginal tax rate between £100,000 and £125,140 — higher than the 45% additional rate. At £125,140, your Personal Allowance is completely removed.

Once your adjusted net income crosses £100,000, your Personal Allowance starts to shrink:

• It falls by £1 for every £2 of income above the £100,000 mark
• By the time you reach £125,140, the allowance is entirely wiped out
• This creates an effective 60% marginal tax rate in the £100,000 – £125,140 window (40% income tax plus 20% from the disappearing allowance)

Marriage Allowance

If you are married or in a civil partnership and one partner earns below the Personal Allowance, they can transfer up to £1,260 of their unused allowance to the higher earner. The recipient must be a basic-rate taxpayer (not paying higher or additional rate). This can reduce your combined tax bill by up to £252 per year. You can also backdate a claim for up to four previous tax years.

Personal Savings Allowance 2025/26

The Personal Savings Allowance (PSA) lets you earn a certain amount of interest on your savings each year without paying tax on it. The amount depends on your income tax band:

Source: HMRC — Tax on savings interest (GOV.UK)

Tax-Free Allowances Summary 2025/26

Beyond the Personal Allowance, there are several other amounts you can receive without paying tax. Here is a consolidated view of every key allowance for the current tax year:

Fiscal Drag: The Hidden Tax Rise

Since 2021/22, the UK government has frozen the Personal Allowance at £12,570 and the higher-rate threshold at £50,270. Meanwhile, average earnings have risen by approximately 15-20% over the same period due to inflation. This mismatch is known as fiscal drag (sometimes called “stealth taxation”) and it has significant real-world consequences:

• More people paying tax: Workers whose wages have risen above £12,570 now pay income tax for the first time, even though their purchasing power has not meaningfully increased.
• More people in the higher-rate band: Employees who earned just below £50,270 in 2021 may now earn above it thanks to pay rises — pushing them from 20% to 40% on the excess. The OBR estimates around 4 million additional higher-rate taxpayers by 2028.
• Real-terms cut to the Personal Allowance: If the £12,570 threshold had risen with CPI inflation since 2021/22, it would be approximately £14,800 in 2025/26 terms. This means every taxpayer is effectively paying around £450 more per year in income tax than if thresholds had kept pace with prices.

High Income Child Benefit Charge (HICBC)

If you or your partner claim Child Benefit and either of you earns more than £60,000 per year, the High Income Child Benefit Charge applies. This effectively claws back some or all of the Child Benefit through a tax charge:

For 2025/26, Child Benefit is £26.05 per week for the eldest child and £17.25 per week for each additional child. A family with two children receives £2,251.60 per year.

Source: HMRC — High Income Child Benefit Charge (GOV.UK)

Scottish Income Tax Rates 2025/26

Scotland sets its own income tax rates through the Scottish Parliament. While the Personal Allowance (£12,570) is the same across the whole of the UK, Scottish taxpayers face a six-band system that differs markedly from the rest of Britain:

Scotland vs England — Side-by-Side

The practical difference depends heavily on your salary level. At lower incomes, the Scottish starter rate of 19% is actually cheaper than the 20% basic rate elsewhere. However, above roughly £28,000 the gap reverses, and by £50,000 a Scottish taxpayer pays around £1,500 more per year than someone on the same salary in England.

Source: HMRC — Scottish Income Tax (GOV.UK)

National Insurance Rates 2025/26

National Insurance Contributions (NICs) are charged on top of income tax and fund the State Pension, NHS and certain benefits. The rates below took effect from 6 April 2025.

Employee NI (Class 1)

Employer NI (Class 1)

Self-Employed NI (Class 4)

Source: HMRC — National Insurance rates and thresholds (GOV.UK)

Capital Gains Tax Rates 2025/26

Capital Gains Tax (CGT) applies when you sell or dispose of an asset that has increased in value — for instance, a second property, shares, or valuables worth over £6,000. Your main home is normally exempt under Private Residence Relief.

Annual Exempt Amount

Everyone has a CGT-free allowance of £3,000 per tax year for 2025/26. This was £6,000 in 2023/24 and £12,300 in 2022/23, so the reduction is significant. Gains up to £3,000 incur no CGT; only the excess is taxed.

Source: HMRC — Capital Gains Tax rates (GOV.UK)

Tax Codes Explained

Your tax code tells your employer how much income tax to deduct from your pay each period. It appears on your payslip and P60. Here are the most common codes for 2025/26 and what they mean:

PAYE vs Self-Assessment: Which Applies to You?

There are two principal ways income tax is collected in the UK. Understanding which route applies to you — or whether you need both — can save you time, money and stress.

When You Need Self-Assessment Even If You Are on PAYE

Many people assume PAYE covers everything, but you must also file a Self-Assessment return if any of these apply:

• Your total income exceeds £100,000 in the tax year
• You receive rental income above £2,500 (or above £1,000 if you want to claim expenses)
• You have foreign income or gains
• You receive child benefit and either partner earns over £60,000 (High Income Child Benefit Charge)
• You are a partner in a business partnership
• You need to claim tax relief on employment expenses exceeding £2,500

Salary Comparison Table 2025/26

The table below shows pre-calculated tax breakdowns for common UK salaries (England, Wales & Northern Ireland rates). All figures assume a single job, no pension contributions, no student loan, and the standard 1257L tax code.

*At exactly £100,000 the Personal Allowance has not yet begun to taper. Above £100,000 it reduces by £1 for every £2 earned.

Worked Tax Calculation Examples

Below are four step-by-step examples showing exactly how income tax and NI are calculated at different salary levels for 2025/26 in England, Wales and Northern Ireland.

Frequently Asked Questions

Related Tax & Salary Calculators