Income tax in the United Kingdom
Income tax in the United Kingdom is progressive: you pay a rising rate as income increases, up to a top marginal rate of 45%. The first £12,570 of income is generally tax-free. Social contributions are usually charged separately. Figures as of 2026.
Income tax in the United Kingdom is administered by HMRC and, for most employees, collected automatically through PAYE, so tax leaves your pay before you receive it. Almost everyone gets a tax-free Personal Allowance of about 12,570 GBP. Income above that is taxed at basic (20%), higher (40%) and additional (45%) rates. The allowance is gradually withdrawn once income passes 100,000 GBP, and Scotland sets its own separate income tax bands.
The 60% band that no rate table shows
Above £100,000 of adjusted net income, the personal allowance is withdrawn at a rate of £1 for every £2 earned. Losing allowance means the income it used to shelter becomes taxable, so on that slice the effective marginal rate is roughly 60% — considerably higher than the additional rate that applies further up. It appears in no published rate table, because it is not a rate: it is the arithmetic of a taper.
This is why pension contributions and salary sacrifice are so heavily used in that band: they reduce adjusted net income, and every pound removed from the taper reclaims allowance as well as avoiding tax. It is one of the few places in the system where the marginal rate falls as income rises past a point, and planning around it is ordinary rather than exotic.
Scotland sets its own rates, and the boundary is residence
Income tax on earnings is partly devolved: the Scottish Parliament sets its own bands and rates, and they differ from the rest of the UK in both number and level. Someone who is a Scottish taxpayer pays those rates on employment income — but the same person pays UK-wide rates on savings and dividend income, which was not devolved.
Status turns on where your main home is, not on where you work or where your employer is based. HMRC assigns an S prefix to the tax code, and a move across the border changes it for the whole tax year in which the main home changed. An employer paying a remote worker in Edinburgh from an office in Leeds still operates Scottish rates.
FAQ
- Why is there an effective 60% tax band over 100,000 GBP?
- Once income passes 100,000 GBP, the Personal Allowance (about 12,570 GBP) is withdrawn by 1 GBP for every 2 GBP earned above the threshold. On top of the 40% higher rate, this loss of tax-free allowance pushes the effective marginal rate on that slice of income to roughly 60% until the allowance is fully gone.
- Does Scotland have different income tax rates from the rest of the UK?
- Yes. Scotland sets its own income tax bands and rates on earned income, so a Scottish taxpayer can face a different structure than someone in England, Wales or Northern Ireland, who use the standard 20%, 40% and 45% rates. The tax-free Personal Allowance of about 12,570 GBP still applies UK-wide, and HMRC works out your residence from your main home.
Important
This is a general overview, not tax advice. Income tax in the United Kingdom is progressive and the exact amount depends on your bracket, deductions, region and personal situation; social contributions are usually separate. Figures are a reference as of 2026 and change yearly — always confirm with the official source or a professional.
Source