UK Tax Brackets

UK tax brackets in 2025/26 set the personal allowance at £12,570, the basic rate at 20% on income between £12,571 and £50,270, the higher rate at 40% on income between £50,271 and £125,140, and the additional rate at 45% on income above £125,140 for taxpayers in England, Wales and Northern Ireland. The thresholds have been frozen since 2021 under Finance Act 2022 and remain frozen through to April 2028. Scottish taxpayers face a separate six-band structure under the Scotland Act 2016. The Office for Budget Responsibility has identified the freeze as the single largest source of fiscal drag in the current UK fiscal framework.

The personal allowance has been frozen at £12,570 since April 2021

The personal allowance was set at £12,570 from April 2021 and frozen through to April 2028 by Finance Act 2022, replacing the previous practice of inflation-linked uplifts under the Income Tax Act 2007. The freeze was announced in the March 2021 Budget as a five-year fiscal drag measure, then extended by two further years in the November 2022 Autumn Statement. Combined with rising nominal wages, the freeze has pulled approximately 1.2 million additional taxpayers into the higher rate band by HMRC's own published analysis, with the OBR forecasting continued growth in the higher-rate population through to the end of the freeze period.

The personal allowance applies uniformly across the UK, including Scotland. Scottish income tax rates apply only to non-savings, non-dividend income above the personal allowance under the Scotland Act 2016 partial devolution arrangements.

The basic rate of 20% applies to income between £12,571 and £50,270

The basic rate of 20% applies to non-savings, non-dividend income above the personal allowance and up to the higher rate threshold of £50,270 in England, Wales and Northern Ireland. The band has been frozen since 2021 and remains frozen through to April 2028 under Finance Act 2022. The basic rate also applies to savings income above the personal savings allowance for basic-rate taxpayers, and to dividend income above the dividend allowance at the basic-rate dividend rate of 8.75%. ONS earnings data places the median full-time UK employee earning within the basic rate band, meaning most working-age taxpayers face the 20% marginal rate.

For self-employed individuals, the basic rate applies to trading profits above the personal allowance up to £50,270 in the same way, calculated through self-assessment. The mechanism is the same: the personal allowance is deducted, then the 20% rate applies to the next slice up to the higher rate threshold.

The higher rate of 40% applies to income between £50,271 and £125,140

The higher rate of 40% applies to non-savings, non-dividend income between £50,271 and £125,140, frozen at the £50,270 threshold under Finance Act 2022 through to April 2028. HMRC Income Tax statistics show the population of higher-rate taxpayers has expanded materially since the freeze began, with the OBR forecasting around 6 million taxpayers in the higher rate band by the end of the freeze period, up from approximately 4 million in 2020/21. The freeze is the central mechanism by which the Treasury raises income tax receipts without legislating a rate change.

The 40% rate applies to the slice of income within the band, not the whole income. A taxpayer earning £55,000 pays 40% on £4,730 of income (the slice between £50,270 and £55,000), with the rest taxed at lower rates or in the personal allowance. This stepped-rate structure is the foundational mechanic of the UK income tax system.

The additional rate of 45% applies above £125,140 after the April 2023 reduction

The additional rate of 45% applies to non-savings, non-dividend income above £125,140 in England, Wales and Northern Ireland, with the threshold lowered from £150,000 to £125,140 from 6 April 2023 by Finance Act 2022. The £125,140 figure was chosen as the point at which the personal allowance has fully tapered to zero (the taper removes £1 of allowance for every £2 of income above £100,000, eliminating the £12,570 allowance entirely at £125,140). The threshold reduction pulled an additional cohort of high earners into the 45% band, raising additional rate receipts materially under the OBR Spring Statement 2023 forecast.

The 45% rate is the top headline rate in the rest of the UK, though Scotland operates a 48% top rate under its Advanced and Top rate framework. Dividend income at the additional rate level is taxed at the additional-rate dividend rate of 39.35%, with the underlying rate structure aligning since the April 2023 reform.

The personal allowance tapers between £100,000 and £125,140

The personal allowance is reduced by £1 for every £2 of adjusted net income above £100,000, eliminating the allowance entirely at £125,140 and creating a marginal income tax rate of 60% on income in the £100,000 to £125,140 band. The taper mechanism is set out in section 35 of the Income Tax Act 2007 and remains a defining feature of the UK tax cliff. For a taxpayer earning £110,000, the personal allowance is reduced by £5,000 (£10,000 above £100,000, divided by 2), leaving £7,570 of allowance, which costs the taxpayer £2,000 of additional 40% tax. Combined with the 40% on the £10,000 itself, the effective marginal rate is 60%.

The 60% trap has been a continued feature of the UK income tax system since the taper was introduced in 2010, with no government legislating its removal. The structure creates a strong incentive for higher earners to use pension contributions, Gift Aid donations, or salary sacrifice to keep adjusted net income below £100,000, an arbitrage HMRC has not closed.

The freeze through 2028 will increase higher-rate taxpayer numbers materially

The OBR Economic and Fiscal Outlook scores the personal allowance and threshold freeze as the most significant single fiscal drag measure in the current parliament, raising substantial revenue without rate changes. The mechanism is straightforward: as nominal wages rise with inflation, the share of income taxed at higher rates increases automatically, raising effective tax rates across the income distribution. The ONS Annual Survey of Hours and Earnings (ASHE) shows nominal median earnings rising materially above CPI in some recent years, accelerating the fiscal drag effect.

The OBR has been explicit about the size of the effect. In the Spring Statement 2023 forecast, the personal threshold freeze was scored as raising tens of billions of pounds in additional income tax receipts across the freeze period, with the bulk of the burden falling on basic and higher-rate taxpayers rather than the additional rate cohort.

Scotland operates a different six-band income tax structure

Scotland operates six income tax bands under the Scotland Act 2016 partial devolution arrangements: starter rate 19%, basic 20%, intermediate 21%, higher 42%, advanced 45%, and top 48% for the 2025/26 tax year. The Scottish thresholds are set by the Scottish Parliament and diverge from those in the rest of the UK. The Scottish higher rate kicks in at £43,662 of taxable income (above the personal allowance), materially lower than the £50,270 used elsewhere. The Scottish advanced rate starts at £75,000 and the top rate at £125,140. Scottish income tax applies only to non-savings, non-dividend income; savings and dividend income remain on the UK-wide rate structure.

The Scottish Fiscal Commission publishes annual forecasts of Scottish income tax receipts under the divergent structure. HMRC operates Scottish PAYE through the S-prefix tax code system to ensure correct withholding for Scottish-resident taxpayers.

What are the UK tax brackets 2025?

For 2025/26 in England, Wales and Northern Ireland, the bands are: 0% personal allowance to £12,570, 20% basic rate £12,571 to £50,270, 40% higher rate £50,271 to £125,140, and 45% additional rate above £125,140. Scotland operates six bands separately under the Scotland Act 2016.

When does the higher tax bracket UK begin?

The higher rate threshold in England, Wales and Northern Ireland is £50,270 of taxable income (£50,270 + £12,570 personal allowance = £62,840 of gross income before higher rate applies, assuming no other allowances). The threshold has been frozen since 2021 and remains frozen through to April 2028 under Finance Act 2022.

What is the 40 tax bracket UK rate?

The higher rate is 40% on non-savings, non-dividend income between £50,271 and £125,140 in England, Wales and Northern Ireland. The 40% applies only to the slice of income within the band, not to the whole income, per HMRC Income Tax rates and allowances.

How do income tax rates UK apply to dividends and savings?

Dividend income above the £500 dividend allowance is taxed at 8.75% basic rate, 33.75% higher rate, and 39.35% additional rate per HMRC dividend income guidance. Savings income is taxed at the same rates as non-savings income above the personal savings allowance, with the starting rate for savings (0% on £5,000) available to taxpayers with limited non-savings income.

Are tax brackets UK 2025 the same as 2024?

Yes. The thresholds are unchanged in nominal terms because of the freeze legislated by Finance Act 2022. However, the real-terms tax burden has risen due to fiscal drag as nominal wages have grown against the frozen thresholds.

When will the UK tax brackets unfreeze?

Under current legislation, the personal allowance and higher rate threshold are frozen at their 2021/22 levels through to April 2028 by Finance Act 2022. The unfreeze date can be changed by further primary legislation, but no such change has been enacted at the time of writing.

How we verified this

This article draws on the following primary UK sources:

• HMRC: Income Tax rates and allowances (2025/26 publication)
• Finance Act 2022 (legislation.gov.uk) for the threshold freeze legislation
• Income Tax Act 2007 (legislation.gov.uk) for the personal allowance taper
• Scottish Government: Income Tax rates 2025/26
• Scotland Act 2016 (legislation.gov.uk) for the devolution framework
• OBR Economic and Fiscal Outlook and Spring Statement 2023 fiscal drag analysis
• ONS Annual Survey of Hours and Earnings (ASHE)

No secondary aggregators, no press releases from commercial providers, and no statistics without a named government or regulatory source were used.