UK Income Tax Rates 2025/26
England, Wales & Northern Ireland
- Personal Allowance: £12,570 (0% tax)
- Basic Rate: £12,571 – £50,270 (20%)
- Higher Rate: £50,271 – £125,140 (40%)
- Additional Rate: Over £125,140 (45%)
The Personal Allowance reduces by £1 for every £2 earned over £100,000, reaching £0 at £125,140. This creates an effective 60% marginal rate between £100,000 and £125,140.
National Insurance 2025/26
- Primary Threshold: £12,570/year
- Main Rate: 8% (£12,570 – £50,270)
- Upper Rate: 2% (above £50,270)
Student Loan Repayment Thresholds
- Plan 1: £24,990/year — 9% above threshold
- Plan 2: £27,295/year — 9% above threshold
- Plan 4: £31,395/year — 9% above threshold
- Plan 5: £25,000/year — 9% above threshold
- Postgraduate: £21,000/year — 6% above threshold
How to Reduce Your Tax Bill
- Pension contributions: Salary sacrifice reduces both tax and NI
- Marriage Allowance: Transfer £1,260 to a basic-rate spouse (saves up to £252)
- Childcare vouchers: Up to £243/month tax-free if enrolled before Oct 2018
- Cycle to Work: Save tax on a bicycle purchase
- Work from Home: Claim £6/week tax relief if your employer requires remote work
- Professional subscriptions: Deductible if on the HMRC approved list
The £100K Tax Trap
Earning between £100,000 and £125,140 is one of the most heavily taxed bands in the UK. You pay 40% income tax plus lose £1 of personal allowance for every £2 over £100K — creating an effective 60% rate. Pension contributions can help: contributing enough to bring adjusted income below £100K restores your full personal allowance.