What Is Income Tax UK? Rates Bands and How to Pay Less 2026
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Chandraketu Tripathi
Finance Editor, Kaeltripton
Published3 Apr 2026
Last reviewed18 Apr 2026
✓ Fact-checked
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UK Tax Guide — April 2026
Income tax is the main tax paid on earnings salaries self-employment income pensions savings interest and rental income in the UK. It is collected by HMRC either through PAYE (for employees) or Self Assessment (for self-employed and those with complex affairs).
Income Tax Rates and Bands 2026/27
Band
Taxable Income
Rate
Personal Allowance
Up to £12,570
0% — tax free
Basic rate
£12,571 to £50,270
20%
Higher rate
£50,271 to £125,140
40%
Additional rate
Over £125,140
45%
Important: Your personal allowance is reduced by £1 for every £2 you earn over £100,000. At £125,140 the personal allowance is completely withdrawn — effectively creating a 60% marginal tax rate between £100,000 and £125,140.
Income Tax Examples 2026/27
Annual Income
Tax Free
Taxed at 20%
Taxed at 40%
Total Tax
£20,000
£12,570
£7,430
£0
£1,486
£30,000
£12,570
£17,430
£0
£3,486
£50,000
£12,570
£37,700
£0
£7,540
£60,000
£12,570
£37,700
£9,730
£11,432
£100,000
£12,570
£37,700
£49,730
£27,432
What Income Is Taxable?
Taxable
Not Taxable
Employment income
ISA income — completely tax free
Self-employment profits
Premium Bond prizes
Pension income
First £1,000 of savings interest (basic rate)
Rental income above £1,000
First £1,000 of trading income
Savings interest above PSA
Child Benefit (below threshold)
How to Pay Less Income Tax
Maximise pension contributions — reduces your taxable income pound for pound
Use your full £20,000 ISA allowance — ISA income is never taxed
Salary sacrifice for pension or benefits — reduces gross pay before tax
Claim Marriage Allowance if your partner has unused personal allowance
Claim all allowable expenses if self-employed
If income is near £100,000 make pension contributions to protect your personal allowance
Bottom line: The most powerful way to reduce income tax is pension contributions — every £100 into a pension costs a basic rate taxpayer just £80 and a higher rate taxpayer just £60. Check your tax code at gov.uk/personal-tax-account and maximise your ISA allowance before the 5 April deadline.
The content on Kaeltripton.com is for informational and educational purposes only and does not constitute financial, investment, tax, legal or regulatory advice. Kaeltripton.com is not authorised or regulated by the Financial Conduct Authority (FCA) and is not a financial adviser, mortgage broker, insurance intermediary or investment firm. Nothing on this site should be construed as a personal recommendation. Rates, figures and product details are indicative only, subject to change without notice, and should always be verified directly with the relevant provider, HMRC, the FCA register, the Bank of England, Ofgem or other appropriate authority before any financial decision is made. Past performance is not a reliable indicator of future results. If you require regulated financial advice, please consult a qualified adviser authorised by the FCA.
CT
Chandraketu Tripathi
Finance Editor · Kaeltripton.com
Chandraketu (CK) Tripathi, founder and lead editor of Kael Tripton. 22 years in finance and marketing across 23 markets. Writes on UK personal finance, tax, mortgages, insurance, energy, and investing. Sources: HMRC, FCA, Ofgem, BoE, ONS.
