Understand UK income tax in plain English. Learn how marginal rates work and why a pay rise never means less take-home pay.
UK income tax uses a marginal rate system. Different portions of your income are taxed at different rates. You never pay the higher rate on your entire income, only on the portion that falls above each threshold.
| Band | Income Range | Rate |
|---|---|---|
| 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% |
If you live in Scotland you pay Scottish Income Tax rates set by the Scottish Parliament. For 2026-27 there are 6 bands. The Starter and Basic thresholds rose 7.4% this year, meaning Scottish taxpayers on lower incomes pay slightly less than equivalent earners in England.
| Band | Income Range | Rate |
|---|---|---|
| Starter | 12,571 to 16,537 | 19% |
| Basic | 16,538 to 29,526 | 20% |
| Intermediate | 29,527 to 43,662 | 21% |
| Higher | 43,663 to 75,000 | 42% |
| Advanced | 75,001 to 125,140 | 45% |
| Top | Over 125,140 | 48% |
If you earn 55,000: the first 12,570 is tax-free, the next 37,700 is taxed at 20%, and only the 4,730 above 50,270 is taxed at 40%. Your effective rate is 17.1%, not 40%. A pay rise that pushes you over a band boundary only taxes the new income at the higher rate.
UK income tax thresholds have been frozen since 2021-22 and will remain frozen until 2031-32. As wages rise with inflation, more income is pulled into higher tax bands each year. This is sometimes called fiscal drag or a stealth tax.
What tax bracket am I in?
Under 50,270 is basic rate (20%). Between 50,271 and 125,140 is higher rate (40%). Above 125,140 is additional rate (45%). Scotland has different thresholds.
Does a pay rise always mean more take-home pay?
Yes, always. The UK uses marginal rates, so only the new income is taxed at the higher rate. The rest stays taxed at the same rates as before.
Free, accurate, 2026-27 rates. Scotland and tax code supported.