Income Tax
This guide shows how much Income Tax you pay in 2026-27, and what you must do about it. Every figure links to its official source.
What it means
Income Tax is charged on your earnings above your Personal Allowance. If you're employed, it's taken from your pay through Pay As You Earn (PAYE) before you receive it. If you're self-employed or have other untaxed income, you report and pay it through Self Assessment.
Bands and rates, 2026-27
| Band | Taxable income | Rate |
|---|---|---|
| Personal Allowance | £0 – £12,570 | 0% |
| Basic rate | £12,570.01 – £50,270 | 20% |
| Higher rate | £50,270.01 – £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
Scotland has different bands and rates — see Scottish Income Tax on GOV.UK (opens in a new tab).
The taper trap
Your Personal Allowance shrinks once your adjusted net income — your income after certain deductions — passes £100,000: £1 lost per £2 of adjusted net income above. It reaches £0 at £125,140.
Inside that band, each extra £1 is taxed at the higher rate — and it also shrinks your tax-free allowance. Together that takes 60%. Plainly: earn £1 over £100,000, keep 40p of it.
What you must do
If you're employed with one job: nothing extra — PAYE handles it. Your tax code tells your employer how much pay is tax-free; the standard code for 2026-27 is 1257L (the Personal Allowance, divided by ten, plus a letter).
If you're self-employed, or your trading or property income is above the relevant allowance below, you must register and file a Self Assessment return. Register with HMRC by 5 October after the end of the tax year you need to report; file and pay by the following 31 January. See how to register for Self Assessment on GOV.UK (opens in a new tab). If the Making Tax Digital rules apply to you, the deadlines and penalties differ in detail — see the Making Tax Digital guide.
What you can safely skip
If you're employed with one job, no benefits, and no other income above the trading or property allowances below: you don't need to file a Self Assessment return. Check your tax code once a year — that's enough for most people on PAYE alone.
National Insurance for the self-employed
Class 4: 6% on profits between £12,570 and £50,270, 2% above that. Class 2 is treated as paid — for state pension purposes — once profits reach the £7,105 Small Profits Threshold; below it, voluntary Class 2 is available at £3.65 a week to protect your state pension record.
How to optimise
The £1,000 trading allowance and £1,000 property allowance can give full relief for small amounts of trading or rental income. You may not need to tell HMRC if no exception or exclusion applies, but records must still be kept — and you can claim the allowance or your actual expenses, never both. Pension contributions reduce your adjusted net income, which is the lever that matters most if you're inside the taper trap above.