How income tax works in United Kingdom
UK income tax applies to employment income, self-employment profits, rental income, most pensions and savings interest. Dividends have their own tax rates and are not taxed as ordinary earned income.
For England, Wales and Northern Ireland in 2026/27, the rates are 20% up to GBP 50,270, 40% up to GBP 125,140 and 45% above that. Scotland uses separate starter, basic, intermediate, higher, advanced and top rates.
The personal allowance is GBP 12,570 and is reduced by GBP 1 for every GBP 2 of income above GBP 100,000. Sole traders and landlords with qualifying income above GBP 50,000 enter Making Tax Digital for Income Tax from 6 April 2026.
Income tax brackets in United Kingdom
| Bracket | Rate | Notes |
|---|---|---|
| Up to GBP 12,570 | 0% | Personal allowance |
| GBP 12,571 to GBP 50,270 | 20% | Basic rate in England, Wales and Northern Ireland |
| GBP 50,271 to GBP 125,140 | 40% | Higher rate in England, Wales and Northern Ireland |
| Over GBP 125,140 | 45% | Additional rate in England, Wales and Northern Ireland |
| Scotland | 19% to 48% | Separate non-savings, non-dividend rates apply |
Tax rates at a glance
- Personal income tax
- 20% to 45%Progressive
- Personal allowance
- GBP 12,570
- Scottish top rate
- 48%
- Employee National Insurance
- 8%
- Employer National Insurance
- 15%
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
EmployeesFreelancersLandlordsContractorsExpats
Watch out for
- The UK has a separate dividend allowance and savings rules, so not all investment income is taxed the same way as salary.
- Employee and employer National Insurance can materially raise the real cost of wages, even when the income tax band looks manageable.
- Making Tax Digital for Income Tax starts on 6 April 2026 for qualifying sole traders and landlords, with lower thresholds coming in 2027 and 2028.
Frequently asked questions
Do you pay income tax in the UK on salary?
Yes. Salary is taxed through PAYE after the personal allowance, with the rate depending on your band and, if you live in Scotland, on Scottish income tax rates.
Do expats pay UK income tax?
Many expats do, if they are UK tax resident or have UK taxable income. Residence, workdays, treaty relief and split-year rules all matter.
Is there a personal income tax return in the UK?
Many people with untaxed income file Self Assessment. For MTD-affected sole traders and landlords, reporting becomes digital and quarterly from April 2026.