How this estimate is calculated
You pay no income tax on the first £12,570 of income, your personal allowance. Above that, income tax is charged in bands, with different bands in Scotland.
Employees also pay National Insurance: 8% of earnings between £12,570 and £50,270 a year, and 2% above that.
If you have a student loan, you repay 9% of income above your plan's threshold, and 6% above £21,000 for a Postgraduate Loan. Repayments come out through payroll alongside tax.
Income tax bands for 2026 to 2027
In England, Wales and Northern Ireland, income is taxed at these rates. Each rate applies only to the part of income inside its band.
| Income per year | Rate |
|---|---|
| Up to £12,570 | 0% |
| £12,570 to £50,270 | 20% |
| £50,270 to £125,140 | 40% |
| Above £125,140 | 45% |
Scottish income tax bands
| Income per year | Rate |
|---|---|
| Up to £12,570 | 0% |
| £12,570 to £16,537 | 19% |
| £16,537 to £29,526 | 20% |
| £29,526 to £43,662 | 21% |
| £43,662 to £75,000 | 42% |
| £75,000 to £125,140 | 45% |
| Above £125,140 | 48% |
Above £100,000, the personal allowance goes down by £1 for every £2 of income and is gone at £125,140. Between those amounts, each extra pound is taxed at a higher effective rate.
The bands assume the full personal allowance. National Insurance is the same in Scotland and the rest of the UK.
Student loan repayment thresholds
Repayments start once income passes your plan's threshold: £26,900 for Plan 1, £29,385 for Plan 2, £33,795 for Plan 4 (Scotland) and £25,000 for Plan 5. You repay 9% of the income above it.
A Postgraduate Loan is repaid at 6% of income above £21,000, on top of any undergraduate plan.
Sole traders
As a sole trader you pay income tax on your profit with the same allowance and bands as an employee.
Instead of Class 1, you pay Class 4 National Insurance: 6% on profits between £12,570 and £50,270, and 2% above. With profits of £7,105 or more, Class 2 is treated as paid, so your National Insurance record is protected.
What this estimate leaves out
- Pension contributions, salary sacrifice and benefits in kind.
- Marriage Allowance, Blind Person's Allowance and other reliefs.
- Tax codes other than 1257L, and starting or leaving part way through the year.
- Income from savings, dividends or property.
- For sole traders: VAT, payments on account timing, and the trading allowance.
Your employer also pays its own National Insurance on top of your gross salary. It is not taken from your pay.