Income Tax Calculator
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Tax Band Breakdown
| Band | Taxable Amount | Tax Due |
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Results are estimates based on HMRC published rates and thresholds. Always consult HMRC or a qualified accountant for your specific tax situation.
How UK Income Tax Works
Income tax is the tax you pay on your earnings in the United Kingdom. It is collected by HM Revenue & Customs (HMRC) and is the government's largest source of revenue. Most employees pay income tax through the PAYE (Pay As You Earn) system, where tax is deducted automatically from your wages by your employer before you receive your pay.
Personal Allowance
The personal allowance is the amount you can earn each year before you start paying income tax. For the 2025/26 tax year, the standard personal allowance is £12,570. This means the first £12,570 of your income is tax-free. However, if you earn more than £100,000, your personal allowance is reduced by £1 for every £2 earned above this threshold, disappearing entirely once your income reaches £125,140.
Tax Bands and Rates
After your personal allowance, income tax is applied in bands. Each band has a different rate, and you only pay that rate on the income within that band. This is a progressive system, meaning higher earners pay a higher proportion of their income in tax. The three main bands for 2025/26 are the basic rate (20%), higher rate (40%), and additional rate (45%).
Tax Codes
Your tax code tells your employer how much tax-free income you are entitled to in each pay period. The most common code is 1257L, which corresponds to the standard £12,570 personal allowance. Letters in your tax code indicate your situation — for example, L means you are entitled to the standard allowance, while BR means all income is taxed at the basic rate.
National Insurance Contributions
In addition to income tax, employees pay National Insurance contributions (NICs) on their earnings. For 2025/26, the employee rate is 8% on earnings between £12,570 and £50,270, and 2% on earnings above £50,270. National Insurance funds state benefits including the State Pension, Statutory Sick Pay, and Maternity Allowance.
The 60% Tax Trap
Earnings between £100,000 and £125,140 face an effective marginal tax rate of 60%. This occurs because your personal allowance is tapered away at a rate of £1 for every £2 earned above £100,000. Combined with the 40% higher rate, each additional pound in this range effectively costs you 60p in tax. Pension contributions can be a tax-efficient way to mitigate this trap.
Income Tax Rates 2025/26
| Band | Taxable Income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 – £50,270 | 20% |
| Higher Rate | £50,271 – £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
Worked Examples
£25,000 Salary
On a gross salary of £25,000 with the standard personal allowance of £12,570, your taxable income is £12,430. All of this falls within the basic rate band, so you pay 20% income tax = £2,486. National Insurance at 8% on £12,430 = £994.40. With a 5% pension contribution (£1,250), your annual take-home pay is approximately £20,269.60, or around £1,689 per month.
£50,000 Salary
On a gross salary of £50,000 with the standard personal allowance, your taxable income is £37,430. You pay 20% on all £37,430 = £7,486 in income tax. National Insurance: 8% on £37,430 = £2,994.40. With a 5% pension (£2,500), your annual take-home is approximately £37,019.60, or about £3,085 per month. You sit just below the higher rate threshold.
£100,000 Salary
At £100,000, your taxable income after the personal allowance is £87,430. Basic rate tax on £37,700 = £7,540, and higher rate tax on £49,730 = £19,892, totalling £27,432. National Insurance: 8% on £37,700 + 2% on £49,730 = £4,010.60. With a 5% pension (£5,000), your take-home is approximately £63,557.40, or about £5,296 per month. Note: earnings above £100,000 trigger the personal allowance taper.
Frequently Asked Questions
Income tax in 2025/26 depends on your earnings. You pay 0% on the first £12,570 (personal allowance), 20% on earnings from £12,571 to £50,270 (basic rate), 40% on earnings from £50,271 to £125,140 (higher rate), and 45% on earnings above £125,140 (additional rate). Use our calculator above for an instant, personalised breakdown.
The standard personal allowance for 2025/26 is £12,570. This is the amount you can earn each year before paying any income tax. It reduces by £1 for every £2 earned above £100,000, and is fully removed once your income reaches £125,140.
PAYE (Pay As You Earn) is the system used by employers to deduct income tax and National Insurance from your wages before you are paid. Your tax code determines your tax-free amount for each pay period. The remaining income is then taxed at the relevant rates (20%, 40%, or 45%) for each band.
Most employees in 2025/26 should be on tax code 1257L, which gives the standard £12,570 personal allowance. Your code may differ if you have benefits in kind, multiple jobs, underpaid tax from a previous year, or other HMRC adjustments. You can check your tax code on your payslip, P60, or via your HMRC online account.
Yes. Workplace pension contributions typically reduce your taxable income. Salary sacrifice pensions are deducted before tax is calculated, reducing both income tax and National Insurance. Relief-at-source pensions receive basic rate (20%) tax relief automatically, and higher or additional rate taxpayers can claim the extra relief through self-assessment.
The 60% tax trap affects those earning between £100,000 and £125,140. In this range, your personal allowance is withdrawn by £1 for every £2 earned above £100,000. Combined with 40% income tax, this creates an effective 60% marginal rate. Increasing pension contributions can reduce your adjusted net income below £100,000, restoring your full personal allowance.
In 2025/26, employees pay Class 1 National Insurance at 8% on earnings between £12,570 and £50,270 per year, and 2% on anything above £50,270. For example, on a £35,000 salary, you would pay 8% on £22,430 = approximately £1,794.40 per year in NI contributions.
Student loan repayments are deducted through PAYE once your earnings exceed the relevant threshold. Plan 1: 9% above £24,990. Plan 2: 9% above £28,470. Plan 4: 9% above £31,395. Postgraduate: 6% above £21,000. If you have both Plan 2 and a Postgraduate loan, both are deducted simultaneously.