Most people know they pay income tax and National Insurance, but fewer know exactly how much — or why their marginal rate is often very different from the headline rate. This guide explains the UK tax system for 2025/26, with precise calculations at £30,000, £50,000 and £100,000.
Income tax in the UK is marginal — you pay each rate only on the portion of income within that band, not on your entire salary. The personal allowance (the amount you can earn before paying any tax) is £12,570 for 2025/26 and has been frozen at this level since 2021.
| Band | Taxable income | Rate |
|---|---|---|
| Personal Allowance | £0 – £12,570 | 0% |
| Basic rate | £12,571 – £50,270 | 20% |
| Higher rate | £50,271 – £125,140 | 40% |
| Additional rate | Above £125,140 | 45% |
Because these rates are marginal, a £50,000 earner does not pay 40% on their whole income — they pay 20% on the £37,700 between £12,570 and £50,270, and that's it. The 40% rate only applies to earnings above £50,270.
National Insurance is a separate deduction from income tax. For employees on NI Category A (the most common), the rates are:
NI thresholds have also been frozen for 2025/26. Employee NI was cut from 12% to 10% in January 2024, then to 8% in April 2024, where it has remained.
At £30,000 your effective tax rate (tax + NI as a percentage of gross) is 15.6%. Your marginal rate on the next £1 of income is 28% (20% tax + 8% NI).
At exactly £50,000 you're still a basic-rate taxpayer — all your taxable income falls within the 20% band. The 40% rate only begins once earnings exceed £50,270.
If your adjusted net income is between £100,000 and £125,140, your personal allowance is reduced by £1 for every £2 you earn above £100,000. This means each extra £2 earned is taxed as income (40%) and removes £1 of allowance that would also have been taxed at 40%.
The effective marginal rate on every additional pound earned in this range is 60% (40% tax on the pound earned + 40% tax on the lost allowance = 60% effective rate).
At £125,140, the personal allowance is fully withdrawn. Every additional pound earned above this level is taxed at 45% (the additional rate).
The most effective escape from this trap is salary sacrifice into a pension. Every pound sacrificed reduces your adjusted net income by one pound — so a £25,000 salary sacrifice from £125,000 down to £100,000 restores the full £12,570 personal allowance, saving up to £5,028 in tax (£12,570 × 40%). In net terms, that £25,000 sacrifice costs you only £10,000 after tax.
Use our take-home pay calculator to model salary sacrifice scenarios and see the exact net cost to your take-home pay.
Scottish taxpayers pay income tax at different rates set by the Scottish Parliament. For 2025/26, Scotland has six bands (compared to three for the rest of the UK):
| Band | Rate | Income range |
|---|---|---|
| Starter rate | 19% | £12,571 – £15,397 |
| Basic rate | 20% | £15,398 – £27,491 |
| Intermediate rate | 21% | £27,492 – £43,662 |
| Higher rate | 42% | £43,663 – £75,000 |
| Advanced rate | 45% | £75,001 – £125,140 |
| Top rate | 48% | Above £125,140 |
A Scottish taxpayer earning £50,000 pays around £1,527 more tax than an equivalent earner in England, Wales or Northern Ireland. NI is the same across all of Great Britain — it is not devolved.
Several things legally reduce how much income tax and NI you pay: