UK Income Tax Rates & Bands 2025/26
Understanding how UK income tax works is essential for anyone on PAYE (Pay As You Earn). The UK uses a progressive tax system — meaning higher income is taxed at higher rates, but only on the portion that falls within each band, not on all earnings.
| Band | Income Range | Rate | Scotland Rate |
|---|
| Personal Allowance | £0 – £12,570 | 0% | 0% |
| Starter (Scotland only) | £12,571 – £14,876 | — | 19% |
| Basic Rate | £12,571 – £50,270 | 20% | 20% |
| Intermediate (Scotland) | £25,298 – £43,662 | — | 21% |
| Higher Rate | £50,271 – £125,140 | 40% | 42% |
| Additional Rate | Over £125,140 | 45% | 48% |
⚠️ Personal allowance taper: If your income exceeds £100,000, the personal allowance is reduced by £1 for every £2 over £100,000. At £125,140, the allowance disappears entirely — creating an effective 60% marginal tax rate between £100,000 and £125,140.
National Insurance Rates 2025/26
National Insurance Contributions (NICs) are a second tax on earnings, paid separately from income tax. They fund state pension, NHS and other social benefits. Employees pay:
| Earnings Band | Employee NI Rate |
|---|
| Up to £12,570/year | 0% (below Primary Threshold) |
| £12,570 – £50,270/year | 8% |
| Over £50,270/year | 2% |
The employee NI rate was cut from 10% to 8% in April 2024, and has remained at 8% for 2025/26. Employers pay 15% on earnings above £5,000 from April 2025 — an increase from the previous 13.8% rate introduced in the 2024 Autumn Budget.
National Insurance and Your State Pension
Paying NI builds your entitlement to the UK State Pension. You need 35 qualifying years of NI contributions for the full new State Pension (currently £11,502.40/year in 2025/26). Each year on PAYE where you earn above the Secondary Threshold counts as a qualifying year. You can check your NI record and State Pension forecast on the HMRC website.
Student Loan Repayment Thresholds 2025/26
| Plan | Repayment Threshold | Rate | Write-off |
|---|
| Plan 1 (pre-Sep 2012) | £24,990/yr | 9% | Age 65 or 25 years |
| Plan 2 (2012–Aug 2023) | £27,295/yr | 9% | 30 years after graduation |
| Plan 4 (Scotland) | £31,395/yr | 9% | Age 65 or 30 years |
| Plan 5 (Aug 2023+) | £25,000/yr | 9% | 40 years after graduation |
💡 Pension and tax tip: Every £1 you contribute to a pension via salary sacrifice reduces your taxable income by £1, saving 20p in income tax (basic rate) or 40p (higher rate). It also reduces NI contributions. A £200/month pension contribution costs a basic rate taxpayer only £160 in take-home pay reduction.
How to Read Your UK Payslip
Understanding your payslip helps you check that the right deductions are being made:
- Gross Pay — your total earnings before any deductions
- Tax Code — most employees have 1257L (standard personal allowance). Emergency codes are W1, M1 or X
- Income Tax — your PAYE deduction for the pay period
- National Insurance — your employee NIC deduction
- Student Loan — only shown if you're in repayment and earning above your threshold
- Pension — if you're auto-enrolled, minimum is 5% employee + 3% employer (8% total)
- Net Pay — what actually hits your bank account
Auto-Enrolment Pension — What You Need to Know
Since 2012, employers must auto-enrol eligible employees into a workplace pension. If you're aged 22–State Pension age and earning over £10,000/year, you are automatically enrolled. The minimum contributions are 5% from you and 3% from your employer (8% total). You can opt out within 30 days to get contributions refunded, but you'll be re-enrolled every 3 years.
Salary Sacrifice — Tax-Efficient Benefits
Many employers offer salary sacrifice arrangements that let you exchange part of your gross salary for non-cash benefits, reducing your tax and NI bill. Common salary sacrifice schemes include:
- Pension — most common, reduces both income tax and NI
- Cycle to Work — save 20–45% on a bicycle and equipment
- Electric Vehicle Leasing — benefit-in-kind rate for EVs is just 2% in 2025/26
- Childcare Vouchers — legacy scheme, now replaced by Tax-Free Childcare
Frequently Asked Questions
How much is the take-home pay on £35,000 in the UK? +
On £35,000 gross salary in 2025/26 (England): income tax is approximately £4,486 and NI is £1,794. Annual take-home is approximately £28,720 or £2,393/month. This assumes standard personal allowance (1257L tax code), no pension contributions and no student loan. Use our calculator above for your exact figure.
What is the highest rate of income tax in the UK? +
The highest income tax rate in England, Wales and Northern Ireland is 45% on income over £125,140 (Additional Rate). In Scotland, the top rate is 48%. Between £100,000–£125,140, the effective marginal rate is 60% due to the tapering of the personal allowance. High earners in this band are advised to make pension contributions to reduce taxable income below £100,000.
Does my employer also pay National Insurance? +
Yes. Employers pay 15% employer NICs on all employee earnings above £5,000/year (from April 2025). This is a cost to your employer on top of your salary — so if you earn £35,000, your employer pays an additional £4,500/year in NICs. This is why salary sacrifice schemes benefit both parties: reducing your gross salary also reduces the employer's NIC bill.
What if my tax code is wrong? +
An incorrect tax code means you may be paying too much or too little tax. Check your payslip — if your code isn't 1257L (standard), there may be a reason (e.g., company car, previous underpayment, multiple jobs). Contact HMRC on 0300 200 3300 or via your Personal Tax Account online to correct your code. Any overpaid tax is refunded — usually through your payslip or self-assessment.
How do I calculate my hourly rate from my annual salary? +
For a standard 37.5-hour week: divide your annual salary by 52 (weeks) then by 37.5 (hours). For £35,000: £35,000 ÷ 52 ÷ 37.5 = £17.95/hour gross. For net hourly rate, divide your annual take-home by total working hours. At £28,720 take-home and 1,950 working hours/year (37.5hr × 52): £28,720 ÷ 1,950 = £14.73 net per hour.