How UK Income Tax Works in 2025/26

Personal Allowance

For 2025/26, the Personal Allowance is £12,570. This is the amount you can earn completely tax-free. If your income exceeds £100,000, it starts to taper — reducing by £1 for every £2 over £100,000.

Tax Bands (England, Wales & NI)

BandIncomeRatePersonal AllowanceUp to £12,5700%Basic Rate£12,571 – £50,27020%Higher Rate£50,271 – £125,14040%Additional RateOver £125,14045%

How PAYE Works

If you are employed, your employer deducts Income Tax through PAYE (Pay As You Earn). Your tax code (usually 1257L) tells your employer how much tax-free income you receive.

Reducing Your Tax Bill

Pension contributions reduce your taxable income pound-for-pound

Marriage Allowance lets you transfer £1,260 of your Personal Allowance to a spouse

Gift Aid on charitable donations extends your basic rate band

Disclaimer: This guide is for information only and does not constitute tax or financial advice. Tax rules are complex and subject to change. Always seek professional advice for your specific circumstances.