Understanding tax bands
Basic, higher and additional rate explained with worked examples.
Income tax in the UK is charged in slices called bands. This sounds intimidating, but it’s actually the fairest way tax can work: you only pay a higher rate on the part of your income above each threshold, never on your whole income.
The three bands for 2026/27
After your tax-free personal allowance of £12,570, the remaining income is split into bands:
- Basic rate (20%) — income from £12,571 to £50,270
- Higher rate (40%) — income from £50,271 to £125,140
- Additional rate (45%) — income above £125,140
If your income is below £50,270, you are a basic-rate taxpayer even though some of your income was tax-free. The labels “basic rate”, “higher rate” and “additional rate” describe your top band, not a single rate on everything.
How the slices add up
Worked example — £60,000 a year.
- Personal allowance: £12,570 taxed at 0% → £0
- Basic rate slice: £37,700 (£12,570 to £50,270) at 20% → £7,540
- Higher rate slice: £9,730 (£50,270 to £60,000) at 40% → £3,892
- Total income tax: £11,432
Notice the “basic rate” slice is £37,700 — that’s exactly the width of the basic rate band. The higher rate only bites on the £9,730 above £50,270.
The “60% trap” for £100,000–£125,140
If your income is between £100,000 and £125,140, your personal allowance is withdrawn at £1 for every £2 earned. This effectively taxes that slice of income at 60%. Anyone in this range should plan around it — pension contributions can be a powerful way to keep income below £100,000.
Why a pay rise rarely “costs you money”
Because bands are marginal, moving into the higher rate band does not mean all your income is taxed at 40%. Someone earning £51,000 pays 40% on just £730. Tax always rises smoothly with income — the marginal rate is simply higher above each threshold. The exception to watch is means-tested benefits and tax credits, where crossing a threshold can lose a whole award.
Check your own numbers
Enter your income in the income tax calculator to see your exact tax by band, or use the salary calculator to include National Insurance, pension and student loan deductions.
Frequently asked questions
What happens if I go into a higher tax band?
Only the income above the band threshold is taxed at the higher rate. For example, going from £50,000 to £51,000 only taxes the extra £1,000 at 40%, not your whole salary.
What are the tax bands for 2026/27?
Basic rate 20% applies to income between £12,571 and £50,270, higher rate 40% applies to £50,271–£125,140, and additional rate 45% applies above £125,140.
Is National Insurance charged in bands too?
Sort of. Employee NI is 8% on earnings between £12,570 and £50,270 and 2% above £50,270. It is calculated on gross employment earnings and uses different thresholds to income tax.
Why does my tax code say 1257L?
1257L reflects your £12,570 personal allowance (the first two digits are the allowance divided by 10). It's the most common tax code. Our how tax codes work guide explains the others.
Try the calculators
Put the numbers from this guide into practice with our free tools.
This guide is for general information only and is not professional financial, tax or legal advice. UK rates and rules change, so always verify important figures with official GOV.UK / HMRC information or speak to a qualified professional. See our full disclaimer.
Keep reading
How UK Income Tax works
The tax-free allowance, rate bands and how PAYE takes tax from your pay.
Read the guide TaxHow tax codes work
Decode 1257L, BR, K codes and what to do if yours looks wrong.
Read the guide TaxWhat is National Insurance?
Why NI is separate from Income Tax and what it pays for.
Read the guide