For 2026 to 2027, taxpayers in England, Wales and Northern Ireland pay 20% on taxable income from £12,571 to £50,270, 40% from £50,271 to £125,140 and 45% above £125,140, assuming the standard £12,570 personal allowance. Each rate applies only to the slice of income inside its band, so moving into a higher band never taxes your whole income at the higher rate.
What are the income tax rates and bands for 2026 to 2027?
Section 2 of Finance Act 2026 sets the main rates for the year: a basic rate of 20%, a higher rate of 40% and an additional rate of 45%. GOV.UK shows the bands in two ways, and both are correct.
Including the standard personal allowance
| Band | Total income | Rate |
|---|---|---|
| Personal allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
Income after allowances
| Band | Taxable income after allowances | Rate |
|---|---|---|
| Basic rate | Up to £37,700 | 20% |
| Higher rate | £37,701 to £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
The second table is the one the legislation uses, and it is the one to use if your personal allowance is not the standard amount, for example because it has been tapered or increased by Blind Person’s Allowance. The figures are identical to 2025 to 2026, 2024 to 2025 and 2023 to 2024 in HMRC’s published rates table.
Who do these bands apply to?
The rates above apply to earnings, pensions, self employed profits and other income that is not savings or dividend income, for taxpayers who are not Scottish taxpayers. HMRC’s rates table presents England, Northern Ireland and Wales together for 2026 to 2027, with the same bands. The position in Wales is explained in Welsh rates of income tax.
Scottish taxpayers pay Scottish rates on this kind of income, with six bands from a 19% starter rate to a 48% top rate for 2026 to 2027. See Scottish income tax. HMRC’s policy paper confirms that the UK basic rate limit and higher rate threshold still govern savings and dividend income for Scottish taxpayers.
Where do the £50,270 and £125,140 limits come from?
They are not separate numbers chosen each year. They are built from two figures in the Income Tax Act 2007:
- The basic rate limit in section 10(5) is £37,700. Income tax is charged at the basic rate on income up to that limit (section 10(2)) and at the higher rate above it (section 10(3)).
- The higher rate threshold of £50,270 is simply the personal allowance of £12,570 added to the basic rate limit of £37,700. HMRC’s policy paper describes it in exactly those terms.
- The higher rate limit is set by section 10(5A) as twice the personal allowance plus the £100,000 point at which the allowance starts to be withdrawn: 2 times £12,570, plus £100,000, gives £125,140. Above it, section 10(3A) charges the additional rate.
The £125,140 figure is also the income at which the personal allowance has been fully withdrawn. Between £100,000 and £125,140 each extra £1 of income both bears 40% tax and removes 50p of allowance, which is why that range carries an effective 60% marginal rate. That zone is covered in personal allowance tapering and the 60% tax trap.
How do the bands apply to earnings?
Take off your personal allowance, then fill the bands in order. Each band is filled before the next one starts.
Illustration only. Three employees with salary as their only income:
| £30,000 | £60,000 | £130,000 | |
|---|---|---|---|
| Personal allowance | £12,570 | £12,570 | £0 |
| Taxable income | £17,430 | £47,430 | £130,000 |
| Basic rate at 20% | £17,430 = £3,486 | £37,700 = £7,540 | £37,700 = £7,540 |
| Higher rate at 40% | None | £9,730 = £3,892 | £87,440 = £34,976 |
| Additional rate at 45% | None | None | £4,860 = £2,187 |
| Total income tax | £3,486 | £11,432 | £44,703 |
The £60,000 earner is a higher rate taxpayer, yet their average rate of income tax is about 19%. Their marginal rate, the rate on the next £1 earned, is 40%. The £130,000 earner has lost the whole allowance because their adjusted net income is over £125,140, so the bands start from the first pound. National Insurance is charged separately on top of these figures.
Under PAYE your employer uses your tax code to spread the allowance and bands across the year’s pay days, so each payslip reflects a share of the annual calculation. See PAYE tax codes.
How do savings and dividends fit into the same bands?
Savings interest and dividends share the same basic rate limit and higher rate limit as earnings, but section 16 of the Income Tax Act 2007 treats them as the highest part of your income, with dividends on top. Earnings and pensions therefore fill the bands first, and your savings and dividends are taxed at whatever band is left.
- Savings. A 0% starting rate for savings applies to up to £5,000 of savings income for 2026 to 2027, but only to the extent other income has not used that band. The personal savings allowance then applies; see the personal savings allowance.
- Dividends. After the £500 dividend allowance, HMRC’s table shows dividend rates for 2026 to 2027 of 10.75% in the basic band, 35.75% in the higher band and 39.35% in the additional band. See dividend allowance and tax rates.
- Property income. Finance Act 2026 introduces separate property rates from 2027 to 2028 of 22%, 42% and 47%. For 2026 to 2027, rental profits are still taxed at the main rates in the tables above.
Can pension contributions or Gift Aid change your bands?
Yes. Both extend your basic rate band rather than reducing your income directly:
- Gift Aid. Section 414 of the Income Tax Act 2007 treats a qualifying donation as made after deduction of basic rate tax and increases both the basic rate limit and the higher rate limit by the grossed up amount of the gift.
- Personal pension contributions under relief at source. Section 192 of Finance Act 2004 lets the scheme claim basic rate relief, and section 192(4) increases the basic rate limit and higher rate limit by the gross contribution where you would otherwise pay higher or additional rate tax, on making a claim.
Illustration only. If the £60,000 earner above makes a gross personal pension contribution of £5,000 under relief at source, their basic rate band rises to £42,700. £5,000 of income moves from 40% to 20%, saving a further £1,000 on top of the basic rate relief added by the pension provider. The extra relief has to be claimed, through the Self Assessment return or, if you do not file one, directly from HMRC.
How long will the bands stay at these levels?
Section 10 of Finance Act 2026 fixes the basic rate limit at £37,700 and the personal allowance at £12,570 for every tax year up to and including 2030 to 2031. Because the higher rate threshold and higher rate limit are built from those figures, £50,270 and £125,140 are also frozen. HMRC’s policy paper confirms the higher rate threshold will be £50,270 until 5 April 2031. The background is set out in the personal allowance explained.
What do people commonly get wrong about tax bands?
- Thinking a pay rise can leave you worse off. Crossing £50,270 only taxes the excess at 40%. The exceptions are the taper zone above £100,000 and benefit clawbacks such as the High Income Child Benefit Charge.
- Using the £50,270 figure when the allowance is not standard. If your allowance is tapered or reduced by tax code deductions, use the £37,700 band against taxable income instead.
- Forgetting that savings and dividends sit on top. A modest dividend can be taxed at 35.75% if salary has already filled the basic rate band.
- Applying the wrong country’s rates. Scottish taxpayer status turns on whether your sole or main place of residence is in Scotland, not on where your employer is based.
Rates for other taxes are listed in UK tax rates and thresholds for 2026 to 2027.
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Related Accountapedia entries
- What changes when you become a higher rate taxpayer
- How to work out your income tax step by step
- How dividends are taxed for individuals
- Separate property income tax rates from April 2027
- How savings and dividend income stack on other income
- Marriage Allowance explained
- Blind Person’s Allowance
Sources
- legislation.gov.uk: Act 2026 c. 11, section 2
- GOV.UK: Income tax rates
- GOV.UK: Income tax rates and allowances current and past
- GOV.UK: Income tax maintaining the personal allowance and the basic rate limit
- legislation.gov.uk: Act 2007 c. 3, section 10
- legislation.gov.uk: Act 2007 c. 3, section 35
- legislation.gov.uk: Act 2007 c. 3, section 16
- legislation.gov.uk: Act 2026 c. 11, section 7
- legislation.gov.uk: Act 2007 c. 3, section 414
- legislation.gov.uk: Act 2004 c. 12, section 192
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.