How is UK income tax calculated for 2026/27?
Income tax is calculated on your taxable income — your gross salary minus your personal allowance (£12,570). The first £37,700 above the personal allowance is taxed at 20% (basic rate). Income between £50,271 and £100,000 is taxed at 40% (higher rate). Above £125,140 the additional rate of 45% applies. Between £100,000 and £125,140 your personal allowance is gradually removed, creating an effective 60% marginal rate.
What is National Insurance and how much do I pay?
Employee National Insurance (Class 1) is charged on earnings between £12,570 and £50,270 at 8%, and 2% on earnings above £50,270. Employer NI is separate and paid by your employer on top of your gross salary at 15% — this does not come out of your take-home pay. NI funds the NHS, state pension, and other social security benefits.
What is the 60% tax trap?
Between £100,000 and £125,140, your personal allowance is reduced by £1 for every £2 of income above £100,000. This means you pay 40% income tax plus 2% NI plus you lose 50p of allowance per £1 — creating an effective marginal rate of approximately 60%. The best way to escape it is to make pension contributions (especially salary sacrifice) to reduce your adjusted net income below £100,000.
How does salary sacrifice pension work?
With salary sacrifice, your employer reduces your gross salary by your pension contribution before calculating tax and NI. This means you save income tax AND National Insurance on the amount sacrificed — not just tax relief. For a basic rate taxpayer, a 5% pension contribution of £1,750 (on £35,000) saves £490 in tax and NI combined. Higher rate taxpayers save even more.
Which student loan plan am I on?
Plan 1: started study in England or Wales before September 2012, or any Northern Ireland student. Plan 2: started in England between September 2012 and July 2023. Plan 4: Scottish students (any year). Plan 5: started in England from August 2023 onwards. Postgraduate loan: masters or PhD students. You can check your plan on your payslip or the gov.uk student loan repayment page.
Why are Scottish income tax rates different?
The Scottish Parliament has the power to set income tax rates and bands for Scottish taxpayers' non-savings income. Scotland currently has more bands than the rest of the UK — Starter (19%), Basic (20%), Intermediate (21%), Higher (42%), Advanced (45%), and Top (48%). National Insurance rates are identical across the whole UK as NI is a reserved matter.
Is this calculator accurate for 2026/27?
This calculator uses the official 2026/27 HMRC rates confirmed for the tax year starting 6 April 2026: personal allowance £12,570, basic rate threshold £50,270, employee NI 8%/2%, and all student loan repayment thresholds as published by HMRC. Results are estimates — your actual payslip may differ due to your tax code, benefit-in-kind adjustments, or other HMRC instructions to your employer.