How UK Income Tax Works
Income tax is the biggest deduction from most UK salaries. Here is how the 2026/27 bands work, what the personal allowance gives you, and how to work out your own bill.
Almost everyone who works in the UK pays income tax, yet few people can explain how it is calculated. The good news is that the system is simpler than it looks. Once you understand the bands and the personal allowance, you can check your own payslip in under a minute. This guide explains income tax for the 2026/27 tax year, which runs from 6 April 2026 to 5 April 2027.
What income tax is
UK income tax is a tax on money you earn, including wages from a job and most pensions. If you are employed, you do not pay it yourself. Your employer takes it from your pay before the money reaches your bank account, through a system called PAYE (Pay As You Earn). Your payslip shows exactly how much was taken. If you are self employed, you report your earnings and pay the tax yourself through Self Assessment.
The 2026/27 income tax bands
Income tax is charged in bands. Each band taxes only the slice of your income that falls inside it. Here are the 2026/27 bands for England, Wales and Northern Ireland.
| Band | Taxable 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% |
The key point about UK income tax is that moving into a higher band never taxes your whole salary at the higher rate. Only the income above each threshold is taxed at the new rate. Everything below keeps its lower rate.
Your personal allowance
The personal allowance is the amount you can earn each year without paying any income tax. For 2026/27 it is £12,570. There is one catch. If you earn more than £100,000, your allowance shrinks by £1 for every £2 above £100,000. At £125,140 it is gone completely, and every pound you earn is taxed.
Worked example: income tax on £35,000
Here is how the bands apply to a £35,000 salary. The first £12,570 is covered by the personal allowance, so no tax there. The remaining £22,430 sits inside the basic rate band, so it is taxed at 20%. That gives £4,486 for the year, or about £373.83 a month. Notice that the 20% applies only to £22,430, not to the full £35,000. That slice by slice method is the heart of income tax.
Check your own salary
Want the exact monthly take home for your pay? Our UK salary calculator applies these bands to any salary, or browse the £35,000 after tax page for the full breakdown.
How you actually pay it
Most employees never think about paying income tax because PAYE handles it. Each payday, your employer works out the tax due on that period’s pay and sends it to HMRC. If your pay is steady through the year, the deductions are steady too. If your pay changes, for example with overtime or a bonus, the deduction for that month moves with it. Your tax code tells your employer how much allowance to give you, which is why keeping it correct matters. Our guide to UK tax codes explains what yours means.
Scotland works differently
If you live in Scotland, you pay Scottish income tax instead, with six bands ranging from 19% to 48%. The personal allowance is the same £12,570, but the rates and thresholds above it differ. See our Scottish income tax guide for the full picture.
Common questions
£3,486 for the 2026/27 tax year. You pay 20% on the £17,430 above your £12,570 personal allowance.
No. Earnings up to the £12,570 personal allowance are tax free, so you pay no income tax at all below that level.
It shrinks by £1 for every £2 you earn above £100,000, and disappears completely at £125,140. Above that point you pay tax on every pound you earn.
Related guides:
National Insurance explained
UK tax codes
How we calculate