Country guides
UK Income Tax and National Insurance Explained
Personal Allowance, the 20/40/45% bands, the 60% trap and how National Insurance stacks on top — UK take-home pay made simple.
8 min read · Reviewed February 2026
Your Personal Allowance
Everyone in the UK gets a Personal Allowance — £12,570 in 2026/27 — that is taxed at 0%. You only start paying income tax on earnings above it. The allowance is frozen rather than rising with inflation, which quietly pulls more people into higher tax over time (so-called fiscal drag).
There's a sting for high earners: once you earn over £100,000, your allowance shrinks by £1 for every £2 above that, disappearing entirely at £125,140. This creates an effective 60% marginal tax band between £100,000 and £125,140 — one of the quirks our calculator captures automatically.
| Band | Taxable income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic | £12,571–£50,270 | 20% |
| Higher | £50,271–£125,140 | 40% |
| Additional | Over £125,140 | 45% |
The three main bands
Above the allowance, England, Wales and Northern Ireland use three bands: 20% (basic) up to £50,270, 40% (higher) up to £125,140, and 45% (additional) above that. Only the income within each band is taxed at that band's rate — moving into the 40% band never reduces your take-home overall.
Scotland is different. It sets its own income tax with six bands, including a 19% starter rate and 42%, 45% and 48% rates higher up. A Scottish taxpayer on a large salary keeps slightly less than someone earning the same in England — our Scotland page breaks this down.
National Insurance on top
National Insurance (NI) is a second payroll deduction that funds the state pension and benefits. Employees pay 8% on earnings between £12,570 and £50,270, then 2% on everything above. Unlike income tax, NI is charged per pay period rather than annually, though the annual effect is similar for steady salaries.
Because NI's main rate falls to 2% above the upper limit while income tax rises to 40%, the combined marginal rate is actually highest in the middle of the income range, not at the very top — an unintuitive feature of the UK system worth knowing when you negotiate pay.
Student loans and pensions
Two more things shape your take-home. Student loan repayments act like an extra tax above a plan-specific threshold (commonly 9% above around £27,295 on Plan 2). And workplace pension contributions reduce your taxable pay, so paying into a pension can be surprisingly cheap in after-tax terms — especially for higher-rate taxpayers.
Our UK calculator lets you toggle a student loan plan and shows income tax and NI separately, so you can see exactly where each pound of a pay rise goes before you accept an offer.
Related
Frequently Asked Questions
+How much is £50,000 after tax in the UK?
On £50,000 in England (2026/27) you pay about £7,486 income tax and £3,000 National Insurance, leaving roughly £39,500 a year — about £3,290 a month. Scotland differs slightly. Use our UK calculator for your exact take-home.
+What is the 60% tax trap?
Between £100,000 and £125,140 your Personal Allowance is withdrawn at £1 for every £2 earned. Combined with 40% tax, this means each extra £1 in that band effectively costs about 60p in tax — a strong reason higher earners pay into pensions.
Estimate only — not tax advice. Figures are estimates based on publicly available tax rules and may not reflect your full circumstances. See our methodology & sources (last reviewed June 2026). Always confirm with an official tax authority or a licensed adviser before making decisions.