UK Salary Calculator 2026/27

The personal allowance for 2026/27 is £12,570. This is the amount you can earn tax-free each year. It has been frozen at this level since 2021/22 and will remain frozen until at least 2027/28. If you earn over £100,000, your personal allowance is gradually withdrawn at a rate of £1 for every £2 above £100,000, reaching £0 at £125,140.

Salary sacrifice involves giving up part of your gross pay in exchange for an employer benefit - most commonly pension contributions. Because the contribution is taken before tax, it reduces your taxable income. On a £35,000 salary with 5% salary sacrifice pension (£1,750), your taxable income drops to £33,250, saving £350 in income tax and £140 in NI - a combined saving of £490 per year.

Scotland has six income tax bands in 2026/27: Starter Rate 19% (£12,571 to £16,537), Basic Rate 20% (£16,538 to £29,526), Intermediate Rate 21% (£29,527 to £43,662), Higher Rate 42% (£43,663 to £75,000), Advanced Rate 45% (£75,001 to £125,140), Top Rate 48% (above £125,140). Scottish taxpayers pay more than those in England on salaries above £28,867.

In England, Wales and Northern Ireland, the 40% higher rate of income tax applies to taxable income above £50,270 in 2026/27. Since the personal allowance is £12,570, this means you pay 40% tax on earnings above £50,270. The threshold has been frozen since 2021, pulling more people into higher rate tax each year as wages rise.

Employee National Insurance (Class 1) in 2026/27 is 8% on earnings between £12,570 and £50,270, and 2% on earnings above £50,270. NI thresholds are the same as income tax. For example, on a £35,000 salary you pay NI of £1,794 per year. NI does not apply to Scottish, Welsh or NI tax variations. It's the same rate across the UK.

The '60% tax trap' affects people earning between £100,000 and £125,140. In this range, you lose £1 of personal allowance for every £2 earned, which means an additional £1 of income in this band is taxed at the 40% higher rate AND costs you £0.50 of allowance (taxed at another 40%), creating an effective marginal rate of 60%. Pension contributions are the most common strategy to avoid this trap.

Fiscal drag occurs when tax thresholds are frozen while wages rise with inflation. Even though income tax rates for 2026/27 are unchanged, if your salary increased since last year, a larger portion may now fall into the higher rate band. For example, a 3% pay rise from £49,000 to £50,470 would push £200 of your income into the 40% band for the first time.

Income tax rates and bands for England, Wales and Northern Ireland are unchanged for 2026/27. The personal allowance remains £12,570 and is frozen until at least April 2028. The main change affecting take-home pay this year is the increase in dividend tax rates, which matters if you receive dividends alongside your salary.