UK Income Tax Calculator (2025/26)

Our UK tax calculator provides accurate take-home pay calculations for the 2025/26 tax year. Simply enter your annual salary and select your region to get a comprehensive breakdown of your net income after all deductions.

What's Included in Gross vs Net Pay

Your gross pay is your total salary before any deductions. Your net pay (take-home pay) is what you actually receive after income tax, National Insurance contributions, and any other deductions like pension contributions or student loan repayments. Our calculator shows you exactly how much you'll receive in your bank account.

Monthly vs Annual Take-Home Pay

Our calculator displays both your annual and monthly take-home pay. The monthly figure is your annual take-home pay divided by 12, giving you a clear picture of your regular income. This helps with budgeting and financial planning throughout the year.

UK income tax uses a progressive system where you pay different rates on different portions of your income. This ensures that those who earn more contribute more to public services while protecting lower earners.

Personal Allowance Explained

Everyone has a personal allowance of £12,570 for 2025/26. This means you don't pay any income tax on the first £12,570 of your earnings. This allowance helps ensure that basic living costs are protected from taxation.

Basic Rate, Higher Rate, and Additional Rate

After your personal allowance, you pay 20% (basic rate) on earnings up to £50,270, 40% (higher rate) on earnings between £50,271 and £125,140, and 45% (additional rate) on earnings above £125,140. This progressive system means you only pay higher rates on the portion of income that exceeds each threshold.

When Your Personal Allowance Reduces

If you earn over £100,000, your personal allowance starts to reduce by £1 for every £2 you earn above this threshold. This means you lose your personal allowance completely if you earn £125,140 or more, effectively creating a 60% tax rate for incomes between £100,000 and £125,140.

The tax code 1257L is the most common tax code in the UK and represents the standard personal allowance of £12,570. Understanding your tax code helps you verify that your employer is deducting the correct amount of tax.

How Tax Codes Work

Your tax code tells your employer how much tax-free income you're entitled to each year. The number represents your personal allowance divided by 10, and the letter indicates any special circumstances. The 'L' suffix means you're entitled to the standard personal allowance.

Other Common Tax Codes

Other codes you might see include 'BR' (Basic Rate - 20% tax on all income), 'D0' (Higher Rate - 40% tax on all income), or 'NT' (No Tax). If you have a different code, it may indicate additional allowances, restrictions, or emergency tax situations.

National Insurance contributions are separate from income tax and fund state benefits including the NHS, State Pension, and unemployment benefits. Understanding how NI is calculated helps you understand your total tax burden.

NI Class 1 Thresholds for 2025/26

For 2025/26, you pay 8% National Insurance on earnings between £12,584 and £50,284, and 2% on earnings above £50,284. No NI is paid on the first £12,584 of earnings. These thresholds are slightly different from income tax thresholds, which is why NI calculations are separate.

What NI Contributions Fund

Your National Insurance contributions help fund essential public services including the National Health Service (NHS), State Pension, unemployment benefits, and other social security benefits. This is why NI is often considered a form of social insurance rather than traditional taxation.

Scotland has devolved tax powers and uses different income tax bands and rates compared to the rest of the UK. This means Scottish taxpayers may pay different amounts of tax on the same income.

Scottish Tax Rates and Thresholds

Scotland has six tax bands: 19% (starter rate) on £12,571-£15,397, 20% (basic rate) on £15,398-£27,491, 21% (intermediate rate) on £27,492-£43,662, 42% (higher rate) on £43,663-£75,000, 45% (advanced rate) on £75,001-£125,140, and 48% (top rate) on earnings above £125,140.

Key Differences from UK Rates

The main differences are the additional intermediate rate (21%) and the higher top rate (48% vs 45%). Scottish taxpayers also have different thresholds, particularly for the basic and intermediate rates, which can result in different tax bills compared to the rest of the UK.

Understanding the difference between effective and marginal tax rates is crucial for financial planning and making informed decisions about additional income, overtime, or bonuses.

What is Your Effective Tax Rate?

Your effective tax rate is the average percentage of your total income that goes to tax. For example, if you earn £60,000 and pay £15,000 in total tax, your effective rate is 25%. This gives you a clear picture of your overall tax burden.

What is Your Marginal Tax Rate?

Your marginal tax rate is the percentage you'd pay on additional earnings. If you earn £60,000, your marginal rate would be 40% (plus 2% NI) on any additional income. This is crucial for decisions about overtime, bonuses, or additional work.

Can You Lower Your Effective Tax Rate?

Yes, you can reduce your effective tax rate through pension contributions, charitable donations, and other tax-efficient investments. Pension contributions receive tax relief, effectively reducing your taxable income and lowering your overall tax burden.

PAYE is the system that automatically deducts income tax and National Insurance from your salary before you receive it. This ensures that tax is collected throughout the year rather than in one large payment.

How PAYE Calculations Work

Your employer uses your tax code to calculate how much tax to deduct each pay period. The system spreads your personal allowance and tax bands across the year, ensuring you pay the correct amount of tax based on your annual income.

PAYE vs Self-Assessment

Most employees use PAYE and don't need to file a tax return. However, you may need to complete a Self-Assessment if you have additional income (rental income, self-employment, etc.), earn over £100,000, or have complex tax circumstances.

Find answers to the most frequently asked questions about UK income tax, National Insurance, and using our tax calculator.

Tax Breakdown Example: £50,000 Salary

For a £50,000 salary in England/Wales/NI: You'll pay £7,486 in income tax (20% on £37,430 after personal allowance) and £2,993 in National Insurance (8% on £37,416). Your take-home pay would be approximately £39,521, giving you an effective tax rate of around 21%.

How to Use the Calculator Accurately

To get accurate results, enter your gross annual salary (before any deductions), select your correct region (England/Wales/NI or Scotland), and ensure you're using the latest tax year rates. The calculator automatically applies the correct thresholds and rates for your situation.

Our calculator uses the latest HMRC rates and thresholds to provide accurate calculations. We've designed it to be simple to use while providing comprehensive tax breakdowns.

Calculation Methodology

We calculate income tax using progressive bands, applying your personal allowance first, then calculating tax on each band separately. National Insurance is calculated using its own thresholds and rates. The calculator automatically handles personal allowance tapering for high earners.

Accuracy and Updates

Our calculator is updated with the latest HMRC rates and thresholds for the 2025/26 tax year. We regularly verify our calculations against official HMRC guidance to ensure accuracy. However, for complex tax situations, we recommend consulting a qualified tax advisor.

Understanding your tax rates helps you make informed financial decisions, plan for the future, and potentially reduce your tax burden through legitimate tax planning.

Financial Planning Benefits

Knowing your effective and marginal tax rates helps you understand the true cost of additional income, plan for salary negotiations, and make decisions about overtime or bonuses. It also helps with retirement planning and investment decisions.

Tax Efficiency Strategies

Understanding your tax position can help you identify opportunities for tax efficiency, such as pension contributions, charitable donations, or other tax-relieved investments. This can significantly reduce your overall tax burden while building wealth for the future.

The UK has different tax systems across its nations, with Scotland having devolved tax powers and Northern Ireland potentially following suit in the future.

England, Wales, and Northern Ireland

These nations currently use the same tax bands and rates: 20% (basic rate), 40% (higher rate), and 45% (additional rate). However, Northern Ireland may gain devolved tax powers in the future, potentially leading to different rates.

Scotland's Devolved Powers

Scotland has full control over income tax rates and bands, leading to the six-band system with rates from 19% to 48%. This means Scottish taxpayers may pay different amounts of tax compared to the rest of the UK, even on the same income.

Effective tax planning can help you reduce your tax burden while staying within the law. Here are some legitimate strategies to consider.

Pension Contributions

Pension contributions receive tax relief, effectively reducing your taxable income. For basic rate taxpayers, a £100 pension contribution costs you £80 after tax relief. For higher rate taxpayers, it costs just £60. This is one of the most effective ways to reduce your tax burden while saving for retirement.

Charitable Donations

Charitable donations through Gift Aid allow charities to claim back the basic rate tax you've paid. Higher rate taxpayers can also claim additional relief on their Self-Assessment tax return, effectively reducing the cost of their donation.

Other Tax-Efficient Investments

Consider ISAs, which provide tax-free growth and income, or other government-approved schemes like the Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS) for higher-risk investments with tax benefits.