Income Tax Calculator 2026/27
See exactly how much income tax you'll pay on your salary
Tax band view
See how each extra pound moves through the personal allowance, basic, higher and additional rate bands.
How to use
- ✓Enter your details in the calculator
- ✓Results update instantly as you type
- ✓2026/27 assumptions already included
Disclaimer
Results are estimates based on HMRC published rates. Individual tax codes, benefits-in-kind, and other factors may affect your actual liability. Consult a qualified accountant for personal advice.
UK Income Tax 2026/27: The Definitive Guide
Income tax is the UK government's primary source of revenue, raising over £280 billion in 2024/25. Yet despite paying it their entire working lives, many people have only a vague understanding of how it is calculated. This guide demystifies UK income tax — explaining the band system, the Personal Allowance, how Scotland differs, and the crucial distinction between marginal and effective rates that confusion about tax bills entirely.
The fundamental principle behind UK income tax is progressivity: the more you earn, the higher the rate you pay on the top portion of your income. This does not mean higher earners are penalised across the board — each band's rate only applies to the income within that band. Understanding this prevents one of the most common misconceptions in UK personal finance.
Tax Paid by Band: Your Breakdown
The chart below shows exactly how your tax is distributed across the different income tax bands, based on your current salary of £40,000.00.
Marginal Rate vs Effective Rate: The Most Important Distinction
The marginal rate is the rate of tax on your next pound of income. The effective rate is the total tax paid divided by total income. These are always different (unless all income falls in one band), and the effective rate is always lower. Knowing this prevents the common fear of "I don't want a pay rise because it'll push me into a higher tax band."
Example: A salary of £40,000.00 has a marginal rate of 20% but an effective rate of just 13.71%. Accepting a pay rise into a higher band will always leave you better off — you'll never take home less because of a pay rise.
UK Income Tax Bands 2026/27: England, Wales and Northern Ireland
| Band | Income Range | Rate | Max Tax in Band |
|---|---|---|---|
| Personal Allowance | £0 to £12,570 | 0% | £0 |
| Basic Rate | £12,571 to £50,270 | 20% | £7,540 |
| Higher Rate | £50,271 to £125,140 | 40% | £29,948 |
| Additional Rate | Over £125,140 | 45% | Unlimited |
Scottish Income Tax Bands 2026/27
Scottish residents pay income tax at rates set by the Scottish Parliament. Scotland has five bands instead of England's three — a more graduated system that generally takes more from higher earners while protecting lower earners.
| Band | Income Range | Rate |
|---|---|---|
| Starter | £12,571 to £14,876 | 19% |
| Basic | £14,877 to £26,561 | 20% |
| Intermediate | £26,562 to £43,662 | 21% |
| Higher | £43,663 to £75,000 | 42% |
| Advanced | £75,001 to £125,140 | 45% |
| Top | Over £125,140 | 48% |
The Personal Allowance and How It Disappears
The Personal Allowance of £12,570 is the amount of income on which no tax is paid. For most people, this is straightforward — but for those earning over £100,000, it begins to taper away. For every £2 earned above £100,000, the Personal Allowance reduces by £1. At £125,140, the allowance is entirely gone.
This creates one of the most punitive effective tax rates in the UK tax system — a 60% effective marginal rate on income between £100,000 and £125,140. Here is why: on top of 40% income tax, the loss of the Personal Allowance taxes an additional £1 for every £2 earned. Mathematically, £1 of income above £100,000 costs 40p in income tax plus 20p from the allowance reduction = 60p total.
The £100,000 Planning Opportunity
If your income is between £100,000 and £125,140, salary sacrifice pension contributions can bring your adjusted net income below £100,000 — restoring your Personal Allowance and generating effective tax relief of 60%. A £10,000 pension contribution could save you £6,000 in tax.
Worked Examples Across the Income Range
| Salary | Income Tax | Monthly Tax | Effective Rate |
|---|---|---|---|
| £20,000.00 | £1,486.00 | £123.83 | 7.4% |
| £25,000.00 | £2,486.00 | £207.17 | 9.9% |
| £30,000.00 | £3,486.00 | £290.50 | 11.6% |
| £35,000.00 | £4,486.00 | £373.83 | 12.8% |
| £40,000.00 | £5,486.00 | £457.17 | 13.7% |
| £50,000.00 | £7,486.00 | £623.83 | 15.0% |
| £60,000.00 | £11,432.00 | £952.67 | 19.1% |
| £80,000.00 | £19,432.00 | £1,619.33 | 24.3% |
| £100,000.00 | £27,432.00 | £2,286.00 | 27.4% |
| £125,000.00 | £43,050.00 | £3,587.50 | 34.4% |
Frequently Asked Questions
If I get a bonus, will it all be taxed at my highest rate?
Yes — bonuses are added to your annual income and taxed at your marginal rate. However, only the bonus amount itself faces the higher rate, not all your income. A £5,000 bonus when you're in the basic rate band costs £1,000 in income tax (20%) plus NI.
What happens if I'm on the wrong tax code?
HMRC adjusts over time via P800 end-of-year calculations. If you've overpaid, you'll receive a refund. If you've underpaid, you'll receive a tax demand — it's always better to check proactively at tax.service.gov.uk.
Does pension salary sacrifice reduce income tax?
Yes. Pension contributions via salary sacrifice reduce your gross pay before income tax and NI are calculated. This means every pound contributed effectively reduces your income tax bill at your marginal rate.
I work from home — can I claim any tax deductions?
If you are employed and your employer doesn't pay working-from-home expenses, you can claim a flat £6/week (£312/year) relief from HMRC. If you're self-employed, you can claim a portion of actual household costs.
Are there income types that are tax-free?
Yes — ISA interest and returns, first £500 of dividends (dividend allowance), first £1,000 of savings interest (basic rate payers), Premium Bond prizes, and most employer benefits below the trivial benefits threshold.
How to use the Income Tax Calculator properly
The Income Tax Calculator is built for tax and income planning. It is designed to turn a complex financial question into a clear working estimate using 2026/27 assumptions. The headline result is useful, but the real value comes from understanding which inputs drive the answer, which thresholds matter, and which linked tools should be checked before making a decision.
This calculator is most useful when you treat it as the first step in a decision chain. Enter realistic values, review the assumptions, then follow the internal links to related calculators and guides. For example, a salary calculation may need a second check against income tax, National Insurance, student loans and pensions. A property calculation may need a second check against stamp duty, mortgage affordability, rental yield and capital gains tax. A business calculation may need to connect corporation tax, VAT, employer NI and dividend tax.
The 2026/27 UK tax and finance environment makes this joined-up approach important. Frozen thresholds mean more earnings are pulled into tax over time. Employer National Insurance remains a major cost above the secondary threshold. Pension contributions, salary sacrifice, student loans and regional tax differences can all change the final answer. A calculator that only shows one number can miss the bigger picture; a calculator supported by internal guides and related tools helps users understand the full decision.
Typical uses
Start with clean inputs
Use the best available numbers for salary, PAYE, income tax, National Insurance, pension deductions, student loans and the difference between gross and net income. Avoid mixing annual and monthly figures, and check whether a figure should be gross, net, pre-tax or post-tax.
Check the assumptions
Results are estimates. They cannot know every payroll code, lender rule, company policy, benefit-in-kind, local tax variation or personal circumstance unless those details are entered or explained.
Sense-check the outcome
Compare the result against your payslip, lender example, budget or tax estimate so you know whether one assumption needs adjusting before you rely on it.
What affects the result?
Several variables can move the final result more than users expect. Tax year thresholds affect the point at which deductions begin. Pension contributions can reduce taxable income but also reduce immediate cash flow. Student loans are calculated using their own thresholds and rates. Salary sacrifice can save income tax and National Insurance but may affect pensionable pay, mortgage affordability or employer benefits. For property calculations, interest rates, term length, fees and deposit size can change the result by thousands of pounds. For business calculations, the interaction between salary, dividends, VAT, corporation tax and National Insurance is often more important than any single rate.
This is why the page includes both a calculator and supporting content. A user looking for a quick estimate can get one instantly. A user making a real decision can continue into the linked guides, compare adjacent tools and understand what the numbers mean. Good internal linking also helps search engines understand the topic relationship between pages: calculators answer transactional queries, while guides answer explanatory queries.
Worked example workflow
A strong workflow starts with a base case. Enter the most likely values first: the salary you expect, the mortgage amount you are considering, the loan term you are comparing, the savings contribution you can afford, or the business profit you expect to make. Record the result, then change one input at a time. This makes it clear which variable is doing the most work.
For a pay calculation, compare the base salary against a scenario with pension salary sacrifice, a scenario with student loan repayments, and a scenario with a bonus or overtime. For a property calculation, compare the current rate against a higher-rate stress test, then shorten or lengthen the term to see the lifetime interest effect. For a business calculation, compare profit extraction methods and then check the connected tax pages. This approach turns a single estimate into a decision framework.
The important point is to avoid changing several assumptions at once. If a result improves, you need to know whether the improvement came from a higher deposit, a lower interest rate, a pension contribution, a tax band change or a different repayment term. The calculator gives the number; the comparison gives the insight.
2026/27 checklist before relying on the result
- Check the tax year: use 2026/27 figures when comparing current salaries, payroll deductions, property taxes or business profits.
- Check the basis: confirm whether an input should be annual, monthly, weekly, gross, net, pre-tax, post-tax or pensionable.
- Check location: Scotland can use different income tax bands, and property taxes differ between England, Scotland and Wales.
- Check deductions: pension, student loans, salary sacrifice, benefits and allowances can all materially alter the result.
- Check related pages: use the internal links on this page to test the decision from a second angle before acting.
How this calculator connects to the wider financial picture
Income and affordability
A calculator result is often used by another decision. Net income affects mortgage affordability, household budgets, emergency fund targets and loan repayment capacity. Gross income affects tax bands, pension contributions, student loan repayments and child benefit. If the page you are using changes an income figure, it is sensible to follow through to the take-home pay, mortgage affordability and budgeting tools.
Tax and timing
Many UK thresholds are annual, but most real-life decisions are monthly. PAYE deductions, mortgage payments, rent, bills and loan repayments are usually felt month by month. A yearly saving can look large until divided by twelve; a monthly cost can look small until multiplied across a full year or mortgage term. The best use of the calculator is to compare both annual and monthly effects.
Risk and sensitivity
The result is only as stable as the assumptions behind it. Interest rates, pay awards, inflation, house prices, bonuses, overtime, profit margins and tax policy can all change. Run a conservative version, a central version and an optimistic version. If the decision only works in the optimistic version, it probably needs more caution.
Record keeping
Keep a note of the assumptions you used, especially for tax, business and mortgage decisions. If your tax code changes, your pension percentage changes, your company profit changes or a lender offers a different rate, rerun the calculation. The internal guides explain the rule changes and the calculators show the numerical impact.
Frequently asked questions about this type of calculator
Is the result exact?
No online calculator can cover every personal circumstance, but it can give a strong planning estimate when the right inputs are used. Use payslips, lender illustrations, HMRC notices or accounting records where possible.
Why does my real result differ?
Differences usually come from tax codes, pension scheme rules, student loan plans, benefits-in-kind, regional tax differences, fees, timing or incomplete input data.
Should I use annual or monthly figures?
Use whatever the calculator asks for. If a field says annual salary, enter the annual gross figure. If a field asks for monthly payment, enter the monthly amount. Mixing periods is the most common source of errors.
What should I do after calculating?
Use the related calculators and guides to test the same decision from another angle, then confirm important choices with payroll, an accountant, a broker or another qualified professional where needed.
How to interpret the result in 2026/27
Short-term cash flow
The monthly result tells you what the decision feels like in real life. For income pages, that means money available after deductions. For mortgage and debt pages, it means the recurring payment. For savings pages, it means the commitment required to hit a target. Monthly affordability should be tested against bills, food, transport, insurance, subscriptions and emergency savings rather than judged in isolation.
Annual tax impact
The annual result shows the tax-year impact. Frozen allowances and thresholds mean the annual view is especially important in 2026/27. It helps identify whether income crosses the higher-rate threshold, whether allowances taper, whether a student loan plan becomes active, or whether a business profit level changes the corporation tax position. Annual numbers also make it easier to compare job offers and investment decisions.
Lifetime cost or benefit
Some decisions look small monthly but large over time. A slightly higher mortgage rate can add tens of thousands over the term. A pension contribution can reduce take-home pay today but build long-term retirement income. A debt repayment change can shorten or lengthen the payoff date. Use the result as a starting point, then check the total cost or total benefit where the calculator provides it.
The goal is not just to display a result, but to help users make better financial decisions. Each calculator page therefore includes supporting explanation, internal links, related calculators and related guides. That structure gives every page enough context to stand alone while also encouraging users to explore the wider topic cluster. It also mirrors how people actually make financial decisions: they calculate, compare, learn, adjust assumptions and calculate again.
Further reading
Take-Home Pay Calculator
Compare the result against a closely related calculator.
Dividend Tax Calculator
Compare the result against a closely related calculator.
UK Income Tax Bands Explained (2026/27)
A plain-English guide to UK income tax bands, rates, and the personal allowance for 2026/27.
National Insurance Explained: Employee and Employer Rates 2026/27
How National Insurance contributions are calculated, who pays, and how to reduce your bill in 2026/27.
Common mistakes to avoid
Do not compare gross figures with net figures. Do not assume a pay rise turns into the same percentage increase in take-home pay. Do not ignore pension, student loan or salary sacrifice deductions. Do not use a mortgage repayment result as a full affordability assessment. Do not make a company director decision by looking only at dividend tax. The right answer normally depends on combined effects.
The best workflow is to run the calculator, read the explanation, then use at least one related calculator and one related guide. This gives a practical answer and a stronger understanding of the rules behind it.
Decision rule
Run a base case, then rerun with one changed assumption. If the answer changes materially, the decision needs a second check before you act.
Related Guides
UK Income Tax Bands Explained (2026/27)
A plain-English guide to UK income tax bands, rates, and the personal allowance for 2026/27.
How to Read Your Payslip: Every Line Explained (2026/27)
A complete line-by-line guide to understanding your UK payslip — income tax, NI, pension, student loans and more.
PAYE Tax Codes Explained: 1257L, BR, K Codes and More (2026/27)
Understand every PAYE tax code — what they mean, when they change, and how to correct a wrong code.