If you're employed, self-employed or run a small company, you'll want to know exactly what percentage of your income goes to tax this year. The good news is the system is simpler than it looks once you see how the bands stack up.
This guide covers the England income tax rates for the 2025/26 tax year (6 April 2025 to 5 April 2026), how the bands and the Personal Allowance work, and a few worked examples so you can see what you'd actually pay.
These rates also apply in Wales and Northern Ireland. Scotland sets its own rates and bands, so we flag the difference where it matters. We've grounded every figure in HMRC's published rates, with sources at the bottom.
What are the England income tax rates for 2025/26?
For 2025/26, there are three income tax rates in England, Wales and Northern Ireland: 20%, 40% and 45%. Which rate applies depends on how much of your income falls into each band.
| Tax band | Taxable income | Rate |
|---|---|---|
| Personal Allowance | £0 to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
The basic rate band covers up to £37,700 of taxable income above your Personal Allowance, which is why the higher rate kicks in at £50,271 (£12,570 + £37,700 + £1). These thresholds are the same for 2025/26 and 2026/27.
The key thing to grasp is that you only pay each rate on the slice of income that falls inside its band, not on your whole salary. That's called marginal taxation, and we explain it next.
How do income tax bands and thresholds work?
Think of your income as filling a stack of boxes. The first box is your Personal Allowance, and you pay nothing on what goes into it. Once it's full, the next box is the basic rate band, taxed at 20%. Only the income that spills into the higher rate box gets taxed at 40%.
A common worry is that a pay rise pushing you into the higher rate means all your income is suddenly taxed at 40%. That isn't how it works. Earning more never leaves you worse off overall.
Illustrative example: income tax on £60,000 in 2025/26
For someone with £60,000 of taxable income in England:
- £0 to £12,570: 0% (Personal Allowance) = £0
- £12,571 to £50,270: 20% on £37,700 = £7,540
- £50,271 to £60,000: 40% on £9,730 = £3,892
- Total income tax: £11,432
So only the £9,730 in the higher rate band is taxed at 40%, not the full £60,000.
It's also worth knowing the difference between your marginal rate and your effective rate. The marginal rate here is 40% (the rate on your last pound earned), but the effective rate (total tax divided by total income) is about 19%. That distinction matters when you're weighing up a pay rise or a pension contribution. If you'd like the maths done for you, our income tax calculator breaks it down band by band.
What is the Personal Allowance and how much can I earn tax-free?
The Personal Allowance is the amount you can earn before paying any income tax. For 2025/26 it's £12,570, the same level it's been since 2021/22 and the same again for 2026/27.
You get one Personal Allowance per tax year, set against your total income. Whether you're employed, self-employed, drawing a pension or earning rent, it's a single allowance across all of it, not one per source.
The £100,000 taper
If your adjusted net income goes over £100,000, your Personal Allowance reduces by £1 for every £2 above that figure. By £125,140 it's gone entirely.
Because you're losing tax-free allowance while also paying 40% on the income itself, the effective rate on earnings between £100,000 and £125,140 works out at around 60%. This is why many people in that band make pension contributions or Gift Aid donations to bring their adjusted net income back under £100,000. If that's you, our tax advisory team can model the options.
How does income tax differ in Scotland?
Scotland sets its own income tax rates and bands for earned income (the Personal Allowance is still UK-wide at £12,570). Scottish rates and bands differ from the rest of the UK, and they change from year to year, so the figures in this guide should not be assumed to apply north of the border.
If you live in Scotland, check the current Scottish rates on gov.uk (linked in Sources) rather than relying on England figures. Scottish income tax applies to your earned income, but dividends and savings interest are still taxed at the UK-wide rates shown above.
How much National Insurance do you pay on top?
Income tax rarely travels alone. Most earned income also attracts National Insurance (NI), which builds your entitlement to the State Pension and some other benefits. You pay it from age 16 until you reach State Pension age, provided you earn above the relevant threshold.
The class you pay depends on how you work:
- Class 1 (employees): deducted from your wages through PAYE.
- Class 1 secondary (employers): paid by the employer on top of wages.
- Class 4 (self-employed): paid on your business profits.
Employee Class 1 NI for 2025/26
| Earnings band | Annual threshold | Rate |
|---|---|---|
| Up to the Primary Threshold | £12,570 | 0% |
| Primary Threshold to Upper Earnings Limit | £12,570 to £50,270 | 8% |
| Above the Upper Earnings Limit | Over £50,270 | 2% |
So as an employee you pay 8% on earnings between £12,570 and £50,270, then 2% on anything above £50,270.
Employer Class 1 secondary NI for 2025/26
Employers pay 15% on each employee's earnings above the Secondary Threshold of £5,000 a year. That's a real cost of taking someone on, so factor it into any hiring decision. If you're moving from sole trader to your first hire, our bookkeeping and payroll support can keep the PAYE side tidy.
Self-employed Class 4 NI for 2025/26
If you work for yourself, you pay Class 4 NI on profits: 6% between the Lower Profits Limit of £12,570 and the Upper Profits Limit of £50,270, then 2% on profits above £50,270. We use this in the worked example below.
Worked example: a self-employed profit of £80,000
This brings income tax and Class 4 NI together for a sole trader, and shows why claiming your allowable expenses matters.
Illustrative example: self-employed, £80,000 taxable profit in 2025/26
Say your turnover is £95,000 and you claim £15,000 of allowable business expenses, leaving a taxable profit of £80,000.
Income tax:
- £0 to £12,570: 0% = £0
- £12,571 to £50,270: 20% on £37,700 = £7,540
- £50,271 to £80,000: 40% on £29,730 = £11,892
- Total income tax: £19,432
Class 4 National Insurance:
- £12,571 to £50,270: 6% on £37,700 = £2,262
- £50,271 to £80,000: 2% on £29,730 = £595
- Total Class 4 NI: £2,857
Putting it together:
| Item | Amount |
|---|---|
| Taxable profit | £80,000 |
| Income tax | £19,432 |
| Class 4 NI | £2,857 |
| Total tax and NI | £22,289 |
| Profit after tax and NI | £57,711 |
That's an effective rate of about 27.9% on the £80,000 profit. A couple of practical points for sole traders at this level:
- You can reduce your taxable profit further with personal pension contributions.
- Once income passes £100,000, the Personal Allowance taper bites.
- You'll file a Self Assessment return by 31 January following the tax year, and you may make payments on account on 31 January and 31 July.
How do I work out my take-home pay?
Your take-home pay is your gross income minus income tax, National Insurance and any other deductions such as pension contributions or student loan repayments. You can do it by hand using the bands above, or save the effort with a calculator.
Illustrative example: £35,000 salary in England, 2025/26
Income tax:
- £0 to £12,570: 0% = £0
- £12,571 to £35,000: 20% on £22,430 = £4,486
Employee NI:
- £12,571 to £35,000: 8% on £22,430 = £1,794
Take-home: £35,000 − £4,486 − £1,794 = £28,720 before any pension or other deductions.
If you're weighing up sole trader versus limited company, the most tax-efficient mix of salary and dividends depends on your profit level and your plans for the cash. Our take-home pay calculator is a quick way to see your figures, and for anything involving multiple income sources or property, it's worth a proper conversation.
Want a clear picture of what you'll actually keep? Book a free 20-minute call with a Zmartly accountant and we'll talk through your income tax, National Insurance and the most efficient way to structure your earnings. Get in touch.
Frequently asked questions
What is the basic rate of income tax in England for 2025/26?
The basic rate is 20%, charged on taxable income between £12,571 and £50,270 for 2025/26. It's unchanged from 2024/25 and stays the same for 2026/27.
How much tax do I pay on a £50,000 salary in England?
On £50,000 in 2025/26 you'd pay £7,486 in income tax (20% on £37,430) and £2,994 in employee National Insurance (8% on £37,430), leaving take-home pay of about £39,520 before pension or other deductions.
When do UK tax rates usually change?
Changes normally take effect at the start of the tax year on 6 April, following a Budget. Some measures take effect on a different date, so always check the specific start date for any announced change before relying on it.
Do non-residents pay UK income tax?
It depends on your tax residency. If you're UK resident, you generally pay UK income tax on your worldwide income; non-residents are taxed only on UK-sourced income. HMRC's Statutory Residence Test determines your status, and the rules can be complex if you split your time between countries.
Are England income tax rates changing for 2026/27?
The 20%, 40% and 45% rates and the £12,570 Personal Allowance are unchanged for 2026/27. With thresholds held flat while wages rise, more income tends to fall into the higher bands over time, even though the headline rates haven't moved.
Do I pay both income tax and National Insurance on the same income?
For employment and self-employment income, yes, though they're worked out separately with their own thresholds. Dividends are different: they're subject to income tax but not National Insurance.
