Income Tax Rates
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What you need to know about income tax
Income tax rates determine how much tax individuals in the UK pay on their earnings, which include wages, pensions, profits from self-employment, and some savings and investments. The UK has different income tax bands and rates depending on how much you earn and where you live, since rates can differ in Scotland. This guide explains how income tax rates work, which bands apply and how to work out what you owe, so you can plan ahead, stay compliant and make the most of any allowances or reliefs available.
What Are Income Tax Rates?
Income tax rates set out how much tax you pay on the money you earn above your personal allowance in each tax year. The UK uses a tiered system with different tax bands, so the more you earn, the higher the rate you pay on the part of your income above each threshold. Most people pay income tax on wages, pensions, self-employed profits, rental income, and some savings or dividends. The rates and bands can vary depending on whether you live in England, Wales, Northern Ireland or Scotland. Knowing which income tax rates apply to you, and how to calculate your tax bill, helps you budget properly and make sure you pay the right amount to HMRC.
Getting Started with Income Tax Rates and Allowances
Before working out how much income tax you will pay, it is important to understand the different income tax rates and how your personal allowance works. Your personal allowance is the amount you can earn tax-free each tax year before income tax rates apply. The UK has several income tax bands (basic, higher and additional), each with its own rate and threshold. Knowing which band your income falls into, and which reliefs or allowances you are entitled to, helps you calculate your tax bill accurately and make the most of any tax-free income you qualify for.
Getting Started with Income Tax Rates and Allowances
Income Basis Rules
Income tax applies to the net amount of income left after all personal allowances are deducted here.
Income Tax Banding
Income is taxed in a particular order, with all savings and dividend income being taxed last always.
Total Income Rules
Dividend and savings allowances income still counts as part of the individual's total income amount.
Savings Rate Limit
Starting rate band applies to savings; 0% is lost if non-savings income is above the starting limit.
Scottish Tax Rates
Scottish Parliament sets income tax rates and limits for residents on non-savings and non-dividends.
Welsh And UK System
Welsh tax combines with UK rates, while savings and dividend income use standard UK tax bands today.
2026/27
Savings Allowance
Dividend Allowance
2025/26
Savings Allowance
Dividend Allowance
Allowances
Personal Tax Base
A personal allowance gives an individual a set amount of tax-free income every year today.
Excess Income Tax
Income earned above the personal allowance limits is subject to income taxation every year.
High Income Cuts!
Allowance reduces by £1 for every £2 received above £100,000 of adjusted net income today.
Senior Couple Tax
Those born before 6 April 1935 may qualify for married couple allowance subject to limits.
Marriage Transfer
Basic rate taxpayers can transfer 10% of personal allowance to their eligible partner now.
Benefit Exclusion
Marriage allowance is not available to couples receiving Married Couple's allowance today.
Personal Allowance
Blind person's allowance
£3,250 (2025/26: £3,130)
Married couple's allowance
Either partner born before 6 April 1935.
Who Pays Income Tax?
UK Taxpayer Category
Most UK residents earning above personal allowances pay tax, including all workforce.
Earned & Pension Pay
Tax is usually paid on employment wages, self-employment profits, and pension income.
Property Rental Duty
You usually pay income tax on rental income from property you let out to tenants now.
Savings & Dividends!
Interest on savings and dividend earnings above allowed limits are subject to UK tax.
Tax-Free Income Form
Some income forms, such as certain state benefits or allowance limits, are tax-free!
Tax Bill Management!
Knowing who pays tax and applicable rates helps you avoid unwelcome financial surprises.
Getting Started with Corporation Tax Rates
Before calculating Corporation Tax, identify whether your business qualifies for the main rate, small profits rate or marginal relief based on its taxable profits. Understanding the relevant rates, thresholds and available deductions helps you calculate your liability accurately and plan ahead. Rates apply by Financial Year, running from 1 April to 31 March. If your accounting period spans two Financial Years, profits are apportioned between them on a time basis.
Year to 31.3.27
How to Pay Income Tax
How you pay income tax depends on how you earn your income.
Employees and Pensioners
If you are employed or receive a pension, your income tax is usually taken automatically through the PAYE (Pay As You Earn) system. Your employer or pension provider uses your tax code to work out how much to deduct each pay period and sends it directly to HMRC.
Self-Employed and Landlords
If you are self-employed, run a business, or have untaxed income (such as rental profits), you pay income tax through Self Assessment. You need to register with HMRC, complete a Self Assessment tax return each year and pay any tax due by the deadlines.
What You'll Need
Keep records of all your income, allowable expenses and any reliefs or allowances you claim. Paying the right amount and filing on time helps you avoid penalties and interest.