UK take-home pay comes from combining two separate deductions, Income Tax and National Insurance, each with its own thresholds and rates, then subtracting both from gross salary. This guide covers the 2026/27 figures in full, explains why nothing on your payslip actually changed this year even though a major policy decision was just made, and works through six salary levels including the notorious £100k to £125,140 tax trap.
What changed for 2026/27, and what genuinely didn't
Every headline figure on a typical payslip, the Personal Allowance, the basic and higher rate thresholds, and the National Insurance rates, is exactly the same in 2026/27 as it was in 2025/26. This is the sixth consecutive year of an unchanged freeze that began in 2021/22. What did change is the freeze's expiry date: the Autumn Budget 2025 extended it from the previously announced 2028 cutoff all the way to April 2031. That's a genuinely new piece of information even though none of the numbers you'll see on a payslip moved.
| Figure | 2025/26 | 2026/27 | What changed |
|---|---|---|---|
| Personal Allowance | £12,570 | £12,570 | No change |
| Higher rate threshold | £50,270 | £50,270 | No change |
| Additional rate threshold | £125,140 | £125,140 | No change |
| National Insurance rates | 8% / 2% | 8% / 2% | No change |
| Freeze expiry (announced) | 2028 | 2031 | Extended by 3 years at Autumn Budget 2025 |
| Dividend tax (basic / higher rate) | 8.75% / 33.75% | 10.75% / 35.75% | +2 percentage points, from 6 April 2026 |
Because everything on the employment side is frozen while wages keep rising with inflation, more of your income gets pulled into taxed bands every year purely through wage growth, a phenomenon called fiscal drag. A 3% pay rise on a £40,000 salary adds £1,200 gross, but only around £864 of it reaches take-home pay once tax and NI take their share, and none of the frozen thresholds move to compensate.
Step 1: Apply the Personal Allowance
The Personal Allowance for 2026/27 is £12,570, the amount you can earn before Income Tax applies at all. Above £100,000 of adjusted net income, the allowance tapers by £1 for every £2 earned, disappearing entirely at £125,140.
Step 2: Calculate Income Tax on the taxable portion
| Band | Taxable income | Rate |
|---|---|---|
| Basic rate | £12,570 – £50,270 | 20% |
| Higher rate | £50,270 – £125,140 | 40% |
| Additional rate | Above £125,140 | 45% |
Only the portion of income within each band is taxed at that band's rate, not your whole income at your top rate.
Step 3: Calculate National Insurance separately
National Insurance is 8% on earnings between £12,570 and £50,270, then 2% on everything above that, with no upper cutoff. NI shares its lower threshold with the Personal Allowance, but unlike Income Tax, it doesn't taper away or stop; the 2% rate simply continues indefinitely.
The £100,000 to £125,140 trap: an effective 60%+ marginal rate
This band catches a lot of people by surprise. Between £100,000 and £125,140, every extra pound you earn does two things at once: it's taxed at the standard 40% higher rate, and it simultaneously withdraws 50 pence of your Personal Allowance (since the allowance shrinks by £1 for every £2 earned above £100,000), and that withdrawn allowance portion is itself then taxed at 40%. The combined effect is a marginal Income Tax rate of roughly 60% within this specific band, and adding the 2% National Insurance on top brings the true marginal rate to about 62%, higher than the 45% additional rate that applies above £125,140. Once income passes £125,140 and the allowance is fully gone, the marginal rate actually drops back down to a comparatively gentler 40% or 45% (plus NI). Pension contributions, which reduce adjusted net income, are the most common way people manage this band deliberately.
Worked examples at six salary levels
| Gross salary | Income Tax | National Insurance | Take-home pay |
|---|---|---|---|
| £30,000 | £3,486 | £1,394 | £25,120 |
| £35,000 | £4,486 | £1,794 | £28,720 |
| £50,000 | £7,486 | £2,994 | £39,520 |
| £75,000 | £17,432 | £3,511 | £54,057 |
| £110,000 | £33,432 | £4,211 | £72,357 |
| £150,000 | £54,332 | £5,011 | £90,658 |
Notice the £110,000 row: despite being £40,000 above the £70,000 mark, the jump in tax and NI from £75,000 to £110,000 is disproportionately steep precisely because that salary sits inside the Personal Allowance taper zone described above.
Complications this doesn't cover
Pension contributions, typically salary-sacrificed and reducing taxable income before tax is calculated, student loan repayments, which are a separate income-tested deduction on top of everything above, and Scotland's different Income Tax bands (Scotland sets its own rates and has six bands rather than three, though National Insurance stays UK-wide and identical) all affect the real figure for many people. None of these are included in the worked examples above.
Skip the manual arithmetic and get an instant estimate with the Take-Home Pay Calculator.
Frequently Asked Questions
Has the UK Personal Allowance changed for 2026/27?
No, it remains frozen at £12,570, the same as every year since 2021/22. What did change is the freeze's end date: the Autumn Budget 2025 extended it to April 2031, three years later than the previously announced 2028 end date.
Why do people earning between £100,000 and £125,140 pay such high tax?
Because the Personal Allowance withdraws at £1 for every £2 earned above £100,000. On top of the standard 40% higher rate, you effectively lose an extra 20% in withdrawn allowance, creating a marginal rate of roughly 60% income tax alone (62% including National Insurance) within that specific £24,860 band, before dropping back to 40% once the allowance is fully gone at £125,140.
What is fiscal drag?
The effect of frozen tax thresholds combined with rising wages. Since the Personal Allowance and rate bands haven't moved since 2021/22 while salaries have risen with inflation, a growing share of everyone's income falls into taxed bands or higher rates than before, even though no tax rate itself increased.
Are Scotland's tax bands the same as the rest of the UK?
No. Scotland sets its own Income Tax rates and bands (six bands rather than three), though the Personal Allowance and National Insurance stay UK-wide and identical for Scottish taxpayers. Someone earning the same salary can have a different Income Tax bill in Scotland versus England, Wales, or Northern Ireland.
Does National Insurance stop at a certain income level?
No, it never stops entirely. It's 8% on earnings between £12,570 and £50,270, then continues at 2% indefinitely above £50,270, with no upper cutoff.