UK income tax calculator

Three charges, and only two of them are called tax

A UK salary meets Income Tax and National Insurance, and they behave differently enough that averaging them into one number hides the thing you most need to know.

Income Tax starts after the Personal Allowance — £12,570 of income taxed at nothing — and then runs through three bands in England, Wales and Northern Ireland: 20.0%, 40.0%, 45.0%. On £45,000 that comes to £6,486.

National Insurance is charged on earnings from work rather than on total income, and it does something no income tax does: the rate falls from 8% to 2% above £50,270. On £45,000 it is £2,594.

Together that is £9,080 on £45,000, leaving £35,920 — an effective rate of 20.2% against a headline band of 20.0%. The gap between those two numbers is the single most misread thing in UK personal tax.

The tax year is the other oddity. It runs 6 April to 5 April rather than January to December, a survival of the pre-1752 calendar that nobody has ever got round to changing.

The 60% rate that appears in no HMRC table

Above £100,000, the Personal Allowance is withdrawn at £1 for every £2 of income, reaching zero at £125,140. That withdrawal is not a tax rate, and it is why no official table shows what is actually happening in that band.

Work it through. Earn £2 more and you pay 40% on those £2, and you also lose £1 of allowance, which means £1 that was untaxed is now taxed at 40%. That is 80p on the first £2 and 40p on the second: 60% of every pound between £100,000 and £125,140.

On £110,000 the published marginal band is 40.0%. The calculator above measures what an extra £100 actually costs and returns 62.0%. Both figures are correct; only one of them answers the question people are asking.

The practical consequence is that a pension contribution in this band is unusually efficient, because it reduces adjusted net income and can restore allowance as well as sheltering the contribution. It is one of the few places in the UK system where a single action is worth substantially more than its headline rate.

Above £125,140 the marginal rate falls back, because there is no allowance left to lose. The band is a spike, not a step — and it is the reason a pay rise from £99,000 to £120,000 is worth much less than it looks.

Scotland is a different tax system, not a surcharge

Since income tax on earnings was devolved, Scotland has set its own rates and bands. It now has six of them where the rest of the UK has three: 19.0%, 20.0%, 21.0%, 42.0%, 45.0%, 48.0%.

The bottom end is slightly cheaper. A starter rate of 19% applies to the first slice of taxable income, so on a modest salary a Scottish taxpayer pays a little less than an English one on the same money.

The middle and upper ends are where it diverges sharply. The higher rate is 42% rather than 40% and it begins earlier, and there is an advanced rate of 45% before the top rate of 48%. On £60,000 the Scottish bill is £13,182 against £11,432 in England — a difference of £1,750 a year on identical earnings.

What Scotland does not set is National Insurance, which remains reserved to Westminster and is identical across the UK. So a Scottish taxpayer's total deduction is the Scottish income tax plus the UK-wide National Insurance, and any comparison that treats the whole deduction as devolved overstates the difference.

Savings and dividend income also stay on the UK-wide rates, which means a Scottish taxpayer can be on two different rate schedules within the same tax return.

The charge that goes down as you earn more

National Insurance is charged at 8% between £12,570 and £50,270 of earnings, and at 2% above that. It is the only significant charge in the UK system that falls as income rises.

That single fact explains a lot of otherwise confusing arithmetic. Crossing into the 40% income tax band at £50,270 raises the income tax rate by 20 points and drops the National Insurance rate by 6, so the combined marginal rate goes from 28% to 42% rather than from 28% to 48%.

It also means the UK's combined marginal rate is not monotonic. It rises to 42%, spikes to 62% in the allowance withdrawal band once National Insurance is counted, falls back to 47%, and lands at 47% at the top. Very few tax systems have a marginal rate curve that goes down twice.

National Insurance is legally computed per pay period rather than annually, which matters for anyone with irregular pay: two months of £8,000 and ten of nothing produces a different bill from £16,000 spread evenly. The figure here annualises it, which is right for a steady salary and wrong for lumpy income.

And it is not just a tax by another name. Entitlement to the State Pension and several contributory benefits depends on the number of qualifying years of National Insurance, which is why the 2% band above the Upper Earnings Limit exists at all: the contribution has already bought the entitlement.

Why your tax rose without any rate changing

The Personal Allowance has been held at £12,570 and the higher rate threshold at £50,270 rather than rising with prices. Nothing was legislated to increase anyone's tax; the thresholds simply stopped moving.

The effect compounds every year. As wages rise with inflation, a larger share of each salary sits above a threshold that has not moved, so the effective rate climbs even when the real value of the pay is unchanged. It is a tax rise that nobody has to vote for and nobody has to announce.

It also pulls people across thresholds who were never the intended target. The £100,000 allowance withdrawal point was set when it caught a small number of high earners; frozen in nominal terms, it now catches ordinary professional salaries in the south-east, complete with the 60% band.

The technical name is fiscal drag, and the same mechanism operates in every system with unindexed thresholds — it is why several US figures on this site have not moved since 1978 or 1986. The UK's version is unusual only in scale and in how explicit the freeze has been.

The practical response is to check where you sit relative to the thresholds each year rather than assuming last year's position holds. A pay rise that crosses £50,270 or £100,000 is worth materially less than its headline figure.

Five ways a UK take-home estimate goes wrong

Reading the marginal rate off the table between £100,000 and £125,140. The table says 40%. The reality is 60% before National Insurance and 62% after, because the allowance is being withdrawn at the same time.

Applying UK rates to a Scottish salary. Six bands, different thresholds, a 42% higher rate. On £60,000 the difference is £1,750.

Assuming National Insurance rises with income. It falls to 2% above £50,270. A calculator that treats it as a flat percentage of the whole salary overstates the bill for anyone above that.

Using a January-to-December year. The UK tax year runs 6 April to 5 April. A mid-year pay rise falls into whichever tax year it was paid in, not whichever calendar year.

Forgetting the allowance is per person, not per household. There is no joint filing in the UK. Two salaries are taxed entirely separately, each with its own Personal Allowance and its own bands, which is a fundamental difference from the US system this site otherwise covers.

Where these figures come from

Every rate and threshold on this page was read off GOV.UK on 2026-09-02, not from a summary and not from memory: GOV.UK — Income Tax rates and Personal Allowances; GOV.UK — Scottish Income Tax; GOV.UK — National Insurance rates and categories.

That matters as much here as it does for a US state. UK thresholds are announced at fiscal events rather than on a fixed annual calendar, several are currently frozen rather than indexed, and Scottish rates are set separately in a different budget — so a page compiled at the wrong moment is stale in a way nothing on its face reveals.

The tax year runs 2026/27, which is the uk tax year runs 6 april to 5 april, not january to december. Figures for the year before or after are different numbers, and a calculator that does not tell you which year it is using is not usable.

What this does not model is stated under the calculator rather than buried: Pension contributions, salary sacrifice, Gift Aid, the Marriage Allowance, Blind Person’s Allowance and student loan repayments are not included. National Insurance is legally computed per pay period, not annually. Annualising it is accurate for a steady salary and wrong for irregular pay. The High Income Child Benefit Charge, which claws back Child Benefit between £60,000 and £80,000 of income, is not modelled.

The arithmetic is deterministic — rates in, result out. The AI on this site explains figures it is given and never produces one, which is the only arrangement in which a language model belongs near a tax calculation, in any country.

PAYE and the tax code, which is where errors actually live

Most UK employees never file a return. Tax is deducted by the employer under PAYE and settled continuously, which works well and hides the one thing worth checking: your tax code.

The code tells the employer how much Personal Allowance to apply. The standard one for 2026/27 represents the full £12,570, and it appears on every payslip. A wrong code produces a systematically wrong deduction every month, and because PAYE feels automatic, it can run for years unnoticed.

The codes worth recognising: one ending in L is the ordinary case. BR taxes everything at the basic rate with no allowance, which is normal for a second job and wrong for a first one. 0T gives no allowance at all and usually means the employer never received a starter declaration. A code with K in front means deductions exceed the allowance, typically because of a benefit in kind or underpaid tax being collected.

PAYE is also cumulative, which produces a confusing effect: it works out what you should have paid for the year to date and adjusts. Start a job part-way through the year and the early months can look overtaxed or undertaxed while the system catches up.

The practical check takes one payslip: compare the code against your circumstances, and compare the annual deduction against a figure like the one above. The two most common findings are a second job on the wrong code and an allowance still reduced for a benefit you no longer receive.

If you are self-employed, none of the National Insurance above applies

The figures on this page are for an employee paying Class 1 National Insurance. Self-employment sits on an entirely different schedule and the calculator does not model it.

Income Tax works the same way: the same Personal Allowance, the same bands, and the same withdrawal above £100,000. What changes is the National Insurance, which becomes Class 4 on profits, at different rates and thresholds from the Class 1 charged on a salary.

The mechanism is different too. There is no PAYE, so nothing is deducted through the year; instead there is Self Assessment, with a filing deadline of 31 January after the tax year ends and payments on account due in January and July.

Payments on account catch almost every first-year self-employed person. The January payment can be the whole of the previous year's tax plus half of it again as an advance on the next — so the first bill is often 150% of what was expected, arriving in the month after Christmas.

The dividend route through a limited company is a separate system again, with corporation tax, dividend allowances and dividend rates, and it is outside what this page covers. Anything with a company in it is a case for an accountant rather than a calculator.

Pension contributions are the one large lever

A pension contribution reduces adjusted net income, and in the UK that has an effect out of proportion to its size at two specific points on the income scale.

The first is £100,000. Because contributions reduce the income the allowance withdrawal is measured against, a contribution in the 60% band saves 60p in the pound — and someone at £110,000 who contributes £10,000 recovers the full Personal Allowance as well as sheltering the contribution.

The second is the higher rate threshold at £50,270. Contributions that bring income back below it save 40% on the amount rather than 20%, which doubles the value of the relief for anyone sitting just above the line.

The mechanics differ by scheme and this is where people lose money. Net pay arrangements and salary sacrifice give the relief automatically; relief at source gives basic rate relief automatically and requires higher rate taxpayers to claim the rest through Self Assessment. A higher rate taxpayer on a relief-at-source scheme who never files is leaving half the relief unclaimed.

Salary sacrifice goes further because it reduces gross pay before National Insurance is calculated, so it saves the 8% as well. It also reduces the salary figure used for mortgages and some benefits, which is a real trade-off rather than a free win.

How this compares with the United States

This site covers both systems, and the differences that matter are structural rather than a matter of who pays more.

There is no joint filing in the UK. Each person is taxed separately with their own allowance and bands, whatever their marital status. In the US, filing jointly widens the brackets and doubles the standard deduction, which changes the answer substantially for a single-earner household.

There is no state layer. The UK has one income tax system with one devolved variation, Scotland. The US has fifty-one, plus local income tax in eleven states — which is why the US side of this site has thousands of pages and this side has one.

The marginal rate curve behaves differently. US federal rates rise monotonically and FICA drops at the Social Security ceiling. The UK curve rises, spikes to 62% in the allowance withdrawal band, and falls twice. A US-shaped mental model applied to a UK salary gets the 60% band wrong every time.

Property tax is not comparable at all. The US charges an annual tax on a home's value, county by county. The UK charges council tax on a banding fixed in 1991, which is a different tax on a different base and cannot be compared with a US effective rate.

Questions

How much tax do I pay on £45,000 in the UK?

About £6,486 of Income Tax and £2,594 of National Insurance — £9,080 in total, leaving £35,920, or £2,993 a month. That is an effective rate of 20.2%, well below the 20.0% band you are in.

What is the Personal Allowance for 2026/27?

£12,570, and it has been frozen at that figure rather than rising with inflation. Above £100,000 it is withdrawn by £1 for every £2 of income, reaching zero at £125,140.

Is there really a 60% tax rate in the UK?

Not as a published rate, but yes in effect. Between £100,000 and £125,140 you pay 40% on each extra pound and lose 50p of Personal Allowance, which is itself then taxed at 40%. That works out at 60% — 62% once National Insurance is counted — and it does not appear in any HMRC rate table.

Do I pay more tax in Scotland?

At higher incomes, yes. Scotland sets six bands against three in the rest of the UK, with a 42% higher rate that starts earlier. On £60,000 the Scottish bill is £13,182 against £11,432. At low incomes the 19% starter rate makes Scotland slightly cheaper.

Why does National Insurance go down when I earn more?

It falls from 8% to 2% above £50,270. National Insurance buys entitlement to the State Pension and contributory benefits, and above the Upper Earnings Limit that entitlement has already been earned — so the charge drops rather than rising.

Does the UK have joint filing like the US?

No. Each person is taxed separately with their own Personal Allowance and their own bands, whatever their marital status. The Marriage Allowance lets one spouse transfer a portion of their allowance in limited circumstances, but there is no joint return.