£12,570
Personal Allowance 2025-26 (tax-free income)
20%
Basic rate (income £12,571–£50,270)
40%
Higher rate (income £50,271–£125,140)
45%
Additional rate (income above £125,140)
How UK income tax bands work
The UK uses a progressive system similar to the US but with different band names and thresholds. Every UK resident gets a Personal Allowance — £12,570 for 2025-26 — which is taxed at 0%. Income above that is taxed in bands: 20% Basic Rate, 40% Higher Rate, and 45% Additional Rate. The Personal Allowance reduces by £1 for every £2 of income above £100,000, creating an effective 60% marginal rate in the £100,000–£125,140 range.
National Insurance Contributions
- Class 1 NICs: paid by employees on earnings between the Primary Threshold (£12,570) and Upper Earnings Limit (£50,270) at 8%
- Above the UEL: 2% on all earnings over £50,270
- Employer NICs: employers also contribute 13.8% on earnings above the Secondary Threshold
- NICs fund the NHS, state pension, and certain state benefits
- Self-employed pay Class 4 NICs (6% between Lower and Upper Profits Limits; 2% above UEL)
How to use the UK income tax calculator
- Enter your annual gross salary in pounds
- Select the tax year (2024-25 or 2025-26)
- Enter any pension contributions (reduces your taxable income)
- Review income tax by band, employee NICs, and net take-home pay
- Toggle between annual, monthly, and weekly breakdowns
💡 Salary sacrifice pensions
Pension contributions via salary sacrifice reduce your gross pay before tax and NIC are calculated — saving both income tax and NICs on the contributed amount. For a higher-rate taxpayer, a £1,000 salary sacrifice pension contribution effectively costs only £600 after the combined tax and NIC saving.
Common mistakes to avoid
- Not checking your tax code — an incorrect code from HMRC means wrong withholding throughout the year
- Ignoring the 60% effective marginal rate trap between £100,000 and £125,140
- Forgetting that HMRC may send a tax calculation (P800) if your tax code was wrong
- Not claiming legitimate reliefs: Gift Aid, marriage allowance, professional subscriptions
- Confusing National Insurance with income tax — they're separate calculations with different thresholds
Related calculators
If you're buying property in England, the UK Stamp Duty Calculator shows the SDLT due on any purchase. For other countries, the Australia Income Tax Calculator and Ireland Income Tax Calculator follow similar PAYE principles with their own rates and thresholds.