UK Tax Year 2026/2027 breakdown

What the 2026/27 ruleset actually does to your pay

The 2026/27 framework is the sixth consecutive year of frozen personal-tax thresholds in England, Wales and Northern Ireland. The Personal Allowance, the Basic Rate threshold, and the Additional Rate threshold are all unchanged from the values set during the Autumn 2024 review — meaning real incomes continue to drift into higher marginal bands without any nominal pay rise. This is fiscal drag, and it is the single largest revenue-raising mechanism in the UK personal tax system this year.

This page is the structured snapshot. The tables above are the authoritative numbers we feed into every downstream calculator on the SalaryGrid network; the commentary below is the editorial reading lane that contextualises them.

The Personal Allowance, and the £100,000 taper

Every UK taxpayer earning less than £100,000 receives a £12,570 Personal Allowance — the first slice of income on which no income tax is due. The allowance shows up on your payslip as the standard 1257L tax code (PA × 10).

Above £100,000 the allowance starts to taper: HMRC removes £1 of allowance for every £2 of income above the threshold. By the time you reach the Additional Rate threshold of £125,140 the entire £12,570 has been clawed back. Within that £25,140 sliver, every pound earned is taxed at the 40% Higher Rate, plus 2% National Insurance, plus an effective 20% from the disappearing allowance, producing the infamous 60% marginal trap.

The only reliable escape valve is salary sacrifice — every pound diverted into a workplace pension reduces adjusted net income, which is what the taper measures. A 10% pension contribution from £110,000 of gross moves you back below the threshold completely.

Class 1 employee National Insurance

National Insurance is UK-wide — the rates do not change between Scotland and the rest of the UK. The 2024 cut from 10% to 8% on the main rate is still in force; the upper rate above the Upper Earnings Limit remains at 2%. There are three meaningful slices:

• 0% on earnings up to the Primary Threshold of £12,570.
• 8% on earnings between the PT and the Upper Earnings Limit of £50,270.
• 2% on every pound above the UEL.

NI is calculated on individual pay periods rather than annualised income, which means lumpy income (bonuses, one-off payments) can interact with the upper-rate threshold differently to a flat monthly salary.

Scotland’s six-band income tax

Scottish taxpayers face six independent income tax bands rather than the three used in the rest of the UK. The bands compress harder around the £40–50k bracket: the Higher Rate of 42% kicks in at just £43,663, but the UK-wide NI rate doesn’t drop from 8% to 2% until £50,270. That overlap creates the Scottish 50% combined-marginal trap — every pound earned between £43,663 and £50,270 is taxed at 42% income tax + 8% NI = 50% marginal.

The Top Rate of 48% applies above £125,140 (the same threshold as the rest-of-UK Additional Rate), so high earners in Scotland face the steepest combined marginal rate in the UK.

Other allowances worth tracking

• Dividend allowance: £500 — unchanged. Below this, dividends are tax-free; above it, basic-rate dividend tax is 8.75%, higher-rate 33.75%, additional-rate 39.35%.
• Capital Gains Tax annual exempt amount: £3,000 — unchanged. CGT rates depend on whether disposals would otherwise sit in your Basic Rate band; main residential property remains at 18% / 24%.
• ISA subscription limit: £20,000 across all account types per person per year.

How this page stays accurate

Every monetary value in this document — every threshold, every band edge, every percentage point — comes from a single source: the @fintech/calc-engine TAX_YEARS map, keyed by this page’s fiscalYear. The numbers you see in the bordered tables, the figures the sidebar calculator runs against, and the structured Dataset schema emitted in the page’s JSON-LD all read from the same constants. If you spot an inconsistency, it is a calc-engine bug rather than an editorial drift.