Income Tax Rates and Personal Allowances Explained (2026/27)

For the 2026/27 tax year, the standard Personal Allowance is £12,570, and Income Tax is charged at 20% on income between £12,571 and £50,270, 40% between £50,271 and £125,140, and 45% above £125,140. Your allowance is reduced once your income passes £100,000 and disappears entirely at £125,140.

This guide explains, in plain language, how the Personal Allowance and the Income Tax bands work for the current tax year (6 April 2026 to 5 April 2027), how the £100,000 allowance taper is calculated, and the other allowances that sit alongside your main allowance. It covers England, Wales and Northern Ireland. It does not cover the separate Scottish Income Tax bands, National Insurance, or how rental profits are taxed for landlords, each of which has its own guide.

What Is the Personal Allowance for 2026/27?

The Personal Allowance is the amount of income you can receive each tax year before Income Tax applies, £12,570 for 2026/27.

The Personal Allowance is the amount of income you can receive each tax year before Income Tax applies. For 2026/27 the standard allowance is £12,570, unchanged from recent years. It is the first slice of your income that is taxed at 0%.

The allowance applies across your combined taxable income. Earnings, pension, rental profit and most other income are added together, and the allowance is set against the total, not against each source separately. How much tax you pay then depends on how much of your income sits above the allowance and how much falls within each band.

Some income is tax-free and does not use up your allowance at all, and separate allowances apply to savings and dividend income. If you are blind or severely sight impaired, Blind Person's Allowance is added on top of your Personal Allowance, raising the amount you can earn before tax.

What Are the Income Tax Rates and Bands?

Income Tax for 2026/27 is charged in bands: 0% up to £12,570, 20% up to £50,270, 40% up to £125,140, and 45% above that.

Income Tax for 2026/27 is charged in bands, with a different rate applied to the income that falls within each band. The bands below apply to someone with the standard £12,570 Personal Allowance in England, Wales and Northern Ireland.

• Personal Allowance up 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 rates apply to the slice of income within each band, not to your whole income. Earning £1 into the higher-rate band does not push all your income to 40%, only that £1 is taxed at 40%. This is the most misunderstood feature of Income Tax, and it is why a pay rise never leaves you worse off overall.

You do not receive a Personal Allowance on taxable income over £125,140, because the allowance has already been fully withdrawn by that point through the £100,000 taper explained below.

How Does the £100,000 Personal Allowance Taper Work?

Above £100,000 of adjusted net income, your Personal Allowance is reduced by £1 for every £2 over the threshold, reaching zero at £125,140.

Once your adjusted net income goes above £100,000, your Personal Allowance is reduced by £1 for every £2 of income above that threshold. Because the allowance is £12,570, it reaches zero once income hits £125,140 (that is, £100,000 plus twice £12,570).

The practical effect is a band of income between £100,000 and £125,140 with an effective marginal rate of about 60%, because each extra £1 earned is taxed at 40% and removes 50p of allowance that then becomes taxable. This is often called the “60% tax trap”, and it is a common reason higher earners make pension contributions or Gift Aid donations to bring their income back below £100,000.

Worked example the £100k taper: Priya has an adjusted net income of £110,000 in 2026/27. She is £10,000 above the £100,000 threshold, so her allowance is reduced by £1 for every £2 over a reduction of £5,000. Standard Personal Allowance £12,570, less taper (£10,000 ÷ 2) −£5,000, reduced Personal Allowance £7,570. If Priya paid £10,000 (gross) into her pension, her adjusted net income would fall back to £100,000, restoring the full £12,570 allowance. These figures are illustrative your correct allowance depends on your specific adjusted net income.

What Other Allowances Reduce Your Income Tax?

Beyond the Personal Allowance, separate allowances exist for savings interest, dividends, and up to £1,000 each of trading and property income.

Beyond the Personal Allowance, several separate allowances can reduce the tax on kinds of income. They apply independently, so you may benefit from more than one in the same year.

Savings and dividend allowances

You have a tax-free allowance for savings interest (the Personal Savings Allowance, which depends on your tax band) and a separate allowance for dividend income if you own shares. Interest and dividends above these allowances are taxed at their own rates, which differ from the main Income Tax rates.

Trading and property allowances

You may receive up to £1,000 of trading income and up to £1,000 of property income tax-free each year. These are two separate £1,000 allowances. The property allowance cannot be combined with the Rent a Room Scheme on the same income, and if your income exceeds £1,000 you must choose between claiming the allowance or deducting your actual expenses.

How Do Marriage and Married Couple's Allowances Work?

If one partner earns less than the standard Personal Allowance, Marriage Allowance can transfer part of it to reduce the higher earner's tax.

If you are married or in a civil partnership and one partner earns less than the standard Personal Allowance, you may be able to claim Marriage Allowance. This lets the lower earner transfer a fixed portion of their unused allowance to the higher-earning partner, reducing that partner's tax.

If you do not qualify for Marriage Allowance and you or your partner were born before 6 April 1935, you may instead be able to claim Married Couple's Allowance, which is given as a reduction in your tax bill rather than as extra allowance. Only one of the two can apply, so it is worth checking which gives the better result.

How Is Income Tax Worked Out Across the Bands?

Tax is worked out slice by slice: each band of income is taxed at its own rate, then the amounts are added together.

To see how the allowance and bands combine, it helps to work through a single figure of total taxable income. The example below shows a taxpayer with £60,000 of income and the standard Personal Allowance.

Worked example £60,000 of income, 2026/27: First £12,570 (Personal Allowance) at 0% = £0. £12,571 to £50,270 (£37,700) at 20% = £7,540. £50,271 to £60,000 (£9,730) at 40% = £3,892. Total Income Tax = £11,432.

Only the £9,730 sitting above £50,270 is taxed at 40%; the rest is taxed at 0% and 20%. These figures are illustrative and ignore National Insurance, savings and dividend income taxed at their own rates, and any reliefs.

Frequently Asked Questions

Conclusion

Understanding your Income Tax rates and Personal Allowance is simple when income comes from one source, but it gets harder once earnings, pension, savings, dividends and rental profit stack together, especially near the £50,270 higher-rate threshold or the £100,000 taper. Getting the interaction wrong can mean overpaying, or an unexpected bill where allowances were withdrawn without you noticing. If your income is approaching £100,000, or you have several income sources feeding into one tax position, it is worth having the calculation checked before you file rather than after.

General information based on GOV.UK guidance “Income Tax rates and Personal Allowances” for the 2026/27 tax year (England, Wales and Northern Ireland). This is not personal tax advice. Rates, bands and allowances change between tax years and Scotland sets different bands — confirm your own position with a qualified adviser or HMRC before acting.