UK Income Tax Calculator

About UK Income Tax Calculator

How UK Income Tax and NI Work

UK income tax is progressive: you only pay the higher rate on the slice of income that crosses each threshold, not on the whole amount. The calculator stacks four bands in sequence - the tax-free personal allowance, the 20% basic band, the 40% higher band, and the 45% additional band - and applies Class 1 employee National Insurance on top at 8% and then 2%.

Worked example (£60,000 gross, 2026/27): Personal allowance £12,570 tax-free, then £37,700 taxed at 20% = £7,540, then £9,730 taxed at 40% = £3,892. Total income tax £11,432. National Insurance: £37,700 at 8% = £3,016, plus £9,730 at 2% = £194.60, total NI £3,210.60. Take-home £45,357.40 per year, or £3,780 per month. Effective rate 24.4%.

2026/27 Income Tax Thresholds

The 2026/27 thresholds and rates are unchanged from 2025/26 and the Autumn Budget 2025 extended the freeze on all income tax and NI bands until April 2031 (previously 2028). HMRC publishes the full band table at gov.uk.

2026/27 National Insurance Thresholds

Class 1 employee NI rates are 8% on pay between £12,570 and £50,270, and 2% above £50,270. Employer NI is 15% above a secondary threshold of £5,000 (relevant if you use the Employee Cost Calculator to see total employment cost). Class 2 self-employed NI was abolished in April 2024 and only voluntary contributions remain at £3.65/week with a £7,105 profit threshold for 2026/27.

• Primary threshold: £12,570 per year
• Main rate (8%): £12,570 to £50,270
• Upper rate (2%): above £50,270

Why the 60% Tax Trap Matters

Between £100,000 and £125,140, every £2 of extra earnings reduces your personal allowance by £1. That lost allowance becomes taxable at 40%, so the effective marginal rate on each extra pound is 40% income tax + 20% (the 40% applied to the £0.50 of clawed-back allowance) = 60%. Add 2% upper-rate NI and it hits 62%. Salary sacrifice into a pension is the standard fix: a £25,140 pension contribution brings adjusted income back to £100,000, restoring the full allowance and reclaiming roughly £15,600 in tax and NI for every £25,140 sacrificed.

How Many People Are in Each Band?

HMRC's Personal Incomes Statistics counted 37.6 million UK income taxpayers in 2024/25. Of those: 29.9 million at the basic rate (~80%), 6.56 million at the higher rate (~17%), and 1.14 million at the additional rate (~3%). The additional-rate count has more than doubled since 2022/23 when the threshold was dropped from £150,000 to £125,140. The Office for Budget Responsibility projects that with thresholds frozen to 2031, an extra 5.2 million workers will start paying income tax and an extra 4.8 million will move into the higher-rate band - fiscal drag in action as wages keep rising while thresholds do not.

Pension Salary Sacrifice - Why It Is So Efficient

Salary sacrifice means your gross pay is reduced before PAYE and NI are calculated, and your employer pays the sacrificed amount into your pension. At a basic-rate income of £40,000, a £200/month sacrifice saves £480/year in income tax and £192/year in employee NI - roughly £672 of extra pension for £2,400 of net-pay reduction. At £60,000 the higher-rate saving is £960 in tax plus £48 in NI. Most UK employers also pass on the 15% employer NI saving as an additional contribution. Auto-enrolment minimums are 3% employee + 5% employer (8% total) of qualifying earnings. The 2026/27 annual allowance remains £60,000, with tapering starting at £260,000 adjusted income. Use the retirement calculator to project how salary sacrifice compounds over a career.

Understanding Your Tax Code

A tax code tells your employer how much tax-free pay to apply each period. Standard codes like 1257L mean a £12,570 annual allowance (multiply the number by 10). Common variants: BR taxes every pound at 20% (often used for second jobs), D0 taxes everything at 40%, D1 at 45%, NT means no tax deducted, and K codes (e.g. K500) add £5,000 to your taxable pay to recover underpayments or tax company benefits. If you think your code is wrong, check your personal tax account at gov.uk/personal-tax-account - roughly 1 in 20 codes contains an error, often from lingering benefit-in-kind entries after a job change.

Student Loan Repayments

Repayments kick in at 9% of income above each plan's threshold, collected through PAYE alongside tax and NI. Plan 5 is the newest and applies to students who started courses in England and Wales from August 2023 with a low £25,000 threshold and a 40-year write-off. Postgraduate loans are separate at 6% above £21,000. The loan calculator can model how long it takes to clear a balance if you pay extra voluntarily.

Scotland Uses Different Bands

This calculator applies the standard UK bands that cover England, Wales, and Northern Ireland. Scottish residents pay Scottish income tax instead, with six bands from 19% starter rate to 48% top rate (set by the Scottish Parliament for 2025/26, unchanged for 2026/27 at publication). National Insurance is not devolved so the 8%/2% rates are identical across the whole UK. For a US comparison, the US income tax calculator models federal brackets and FICA.

Take-Home by Salary Level (2026/27)

Actual take-home pay depends on pension contributions, student loans, and benefits in kind, but the table below shows the baseline for a standard 1257L code with no pension and no student loan. Effective rate covers income tax and Class 1 employee NI combined.

How Does the UK Compare Globally?

Per OECD Taxing Wages 2024, the UK total tax wedge on the average single worker is roughly 31.3%, slightly below the OECD average of 34.8% and well below France (47%) or Germany (47.9%). The US equivalent figure is 29.9%. UK personal allowances are generous at the entry point - someone on £12,570 pays literally £0 in income tax and NI - but the flat personal-allowance taper at £100,000 creates one of the highest effective marginal rates in the developed world on incomes £100k-£125k. The additional-rate threshold of £125,140 also means UK top-rate tax starts earlier than in Germany (€277,826) or France (€180,294).

Common Mistakes People Make

• Assuming a pay rise bumps all income into a new band. Only the portion above the threshold is taxed at the higher rate.
• Ignoring the 60% trap above £100,000. A bonus that pushes you over £100k can be taxed more heavily than one that stays below.
• Forgetting pension sacrifice cuts NI too. Many people realise they save income tax but forget the 8% NI saving that makes sacrifice beat relief-at-source contributions.
• Not checking Plan 5 status. Students who started in or after August 2023 are on Plan 5 with a £25,000 threshold, not Plan 2 at £29,385.
• Leaving an emergency tax code on after a job change. Codes like 1257L W1/M1 only apply the allowance from the current period forward and usually over-deduct tax.
• Double-counting pension relief at higher rate. Relief-at-source pensions give basic-rate relief automatically, but higher and additional-rate taxpayers must claim the extra 20% or 25% through Self Assessment. HMRC estimates £1.5 billion in unclaimed higher-rate pension relief sits with employees each year.
• Missing the marriage allowance. Where one spouse earns under the personal allowance and the other is a basic-rate taxpayer, the lower earner can transfer £1,260 of allowance for a £252 annual tax saving. Claims can be backdated four tax years.

What Counts as Taxable Income

PAYE captures most employment income including salary, bonuses, commission, overtime, sick pay, and cash tips processed through payroll. Benefits in kind - company cars, private medical insurance, gym memberships - are taxed through an adjusted tax code or Self Assessment. Savings interest above the Personal Savings Allowance (£1,000 for basic-rate taxpayers, £500 for higher-rate, £0 for additional-rate) is taxable. Dividends above the £500 allowance are taxed at 8.75%, 33.75%, or 39.35% by band. Rental income, self-employment profit, and foreign income usually require Self Assessment and are not captured by this calculator.

All calculations run in your browser with no data sent to any server. This tool provides estimates for educational purposes only and does not constitute tax advice. Consult HMRC or a qualified accountant for guidance specific to your circumstances.

Sources

• GOV.UK - Income Tax rates and Personal Allowances
• GOV.UK - National Insurance rates and categories
• HMRC - Personal Incomes Statistics (taxpayer counts by band)
• ONS - Annual Survey of Hours and Earnings 2025
• GOV.UK - Student loan repayment thresholds and rates
• OBR - Economic and Fiscal Outlook (threshold freeze impact)
• GOV.UK - Tax codes explained