2026/27 UK Income Tax Bands
UK income tax for 2026/27 uses three main bands after the personal allowance:
- Basic rate (20%): applied to income between £12,571 and £50,270
- Higher rate (40%): applied to income between £50,271 and £125,140
- Additional rate (45%): applied to income above £125,140
The personal allowance of £12,570 is tapered for high earners: it reduces by £1 for every £2 earned above £100,000, falling to zero at £125,140. This creates an effective 60% marginal rate for income between £100,000 and £125,140.
Scottish taxpayers pay different income tax rates set by the Scottish Parliament; this calculator uses the England, Wales and Northern Ireland rates.
National Insurance Contributions (Class 1)
Employees pay Class 1 National Insurance contributions at:
- 8% on earnings between the Primary Threshold (£12,570) and the Upper Earnings Limit (£50,270)
- 2% on all earnings above £50,270
NI contributions fund the NHS and state pension entitlement. Unlike income tax, NI is calculated on a pay-period basis and does not have an annual reconciliation in the same way; this calculator provides an annual and monthly approximation.
Student Loan Repayments
Student loan repayments are collected through PAYE once earnings exceed the 2026/27 repayment threshold for your plan:
- Plan 1: 9% on earnings above £26,900 (applies to loans before Sept 2012 in England/Wales, or in Northern Ireland)
- Plan 2: 9% on earnings above £29,385 (England/Wales, started university after Sept 2012)
- Plan 4: 9% on earnings above £33,795 (Scotland)
- Plan 5: 9% on earnings above £25,000 (new undergraduate loans from 2023 onwards)
- Postgraduate: 6% on earnings above £21,000
Worked example: £40,000 salary with a pension and Plan 2 loan
Suppose you earn £40,000 a year, pay 5% into a workplace pension and repay a Plan 2 student loan. The calculator takes the £2,000 pension contribution off before income tax, then subtracts the £12,570 personal allowance, leaving £25,430 of taxable income. All of it falls in the 20% basic rate band, so income tax is £5,086.
National Insurance is 8% of the £27,430 earned between £12,570 and £40,000, which is £2,194. The Plan 2 repayment is 9% of the £10,615 earned above the 2026/27 threshold of £29,385, or £955.
After income tax, NI, the pension and the loan, net pay is £29,764 a year, or about £2,480 a month. The effective income tax rate is 12.72% of gross salary.
Frequently asked questions
What is the personal allowance for 2026/27?
The personal allowance for 2026/27 is £12,570, the same amount as in 2025/26. For earners above £100,000 the allowance reduces by £1 for every £2 of income above that threshold, reaching zero at £125,140.
What is the difference between income tax and National Insurance?
Income tax is a general tax on income and funds public services broadly. National Insurance (NI) is a separate contribution that funds specific benefits including the state pension, statutory sick pay and the NHS. They are calculated separately and have different thresholds, though HMRC collects both through PAYE.
Why is there a 60% effective marginal rate between £100,000 and £125,140?
Above £100,000 you pay income tax at 40% (higher rate) AND lose £1 of personal allowance for every £2 earned. Losing the allowance effectively taxes that lost allowance at 40% too, giving a combined effective marginal rate of 60% for income in this range. Pension contributions can help reduce income into this band.
Does this calculator cover Scottish income tax?
No. Scottish taxpayers pay different rates set by the Scottish Parliament (six bands from 19% to 48% in 2026/27). This calculator uses the England, Wales and Northern Ireland rates. For Scottish rates use HMRC's own tax calculator.
What pension contributions are included?
This calculator uses the pension percentage you enter to reduce gross income before applying income tax (pension contributions typically reduce your taxable income). National Insurance is still calculated on your full salary, which matches most pension schemes other than salary sacrifice. The exact treatment depends on your pension scheme type.