Your payslip shows two big deductions, Income Tax and National Insurance, and often a few smaller ones such as pension and student loan. Together they decide how much of your salary you actually see. This guide explains every one for the 2026/27 tax year (6 April 2026 to 5 April 2027), how they’re calculated, and the handful of decisions that make a real difference to your take-home pay.
The Personal Allowance
Almost everyone can earn £12,570 a year before paying any Income Tax. That is the standard Personal Allowance. It has been frozen at this level for several years and is set to stay frozen for several more. It shrinks by £1 for every £2 of income above £100,000 and disappears completely at £125,140. Some people get more: the Marriage Allowance lets a lower-earning spouse transfer £1,260 of unused allowance, and the Blind Person’s Allowance adds to it.
Income Tax bands: England, Wales & Northern Ireland
| Band | Income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 – £50,270 | 20% |
| Higher rate | £50,271 – £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
Bands are marginal: each rate only applies to the part of your income inside the band. Earning £50,271 doesn’t mean 40% on everything, only on £1. Wales has the power to vary its rates, but currently uses the same rates as England.
Income Tax in Scotland
Scottish taxpayers pay Scottish Income Tax on earnings, set by the Scottish Parliament, with six bands:
| Band | Income | Rate |
|---|---|---|
| Starter | £12,571 – £16,537 | 19% |
| Basic | £16,538 – £29,526 | 20% |
| Intermediate | £29,527 – £43,662 | 21% |
| Higher | £43,663 – £75,000 | 42% |
| Advanced | £75,001 – £125,140 | 45% |
| Top | Over £125,140 | 48% |
Which system you use depends on where you live, not where you work. Compare Scotland and England at every salary.
National Insurance
Employees pay Class 1 National Insurance on earnings, not on pensions or savings. For 2026/27:
| Earnings | Employee rate |
|---|---|
| Up to £12,570 a year (£242 a week) | 0% |
| £12,570 – £50,270 | 8% |
| Above £50,270 | 2% |
NI is worked out per pay period, not annually. If your pay varies, you can pay a little more or less than the annual figure suggests, and there’s no year-end refund for employees as there is with Income Tax. Your employer also pays 15% on your earnings above £5,000, which you never see. After State Pension age you stop paying employee NI altogether.
Tax codes and PAYE
Employers deduct tax through PAYE using the tax code HMRC gives them. The most common code is 1257L: “1257” means a £12,570 allowance spread across the year, and “L” means the standard allowance. Codes starting with S are Scottish rates and C Welsh. A K code means you owe tax on benefits or underpaid tax that exceeds your allowance. BR, D0 and 0T are used for second jobs or when HMRC doesn’t have enough information, and often lead to over-paying. Check yours in the HMRC app.
Student loans
| Plan | Who has it | Repay 9% of income over |
|---|---|---|
| Plan 1 | England/Wales before Sept 2012, Northern Ireland | £26,900 |
| Plan 2 | England/Wales Sept 2012 – July 2023 | £29,385 |
| Plan 4 | Scotland | £33,795 |
| Plan 5 | England from Aug 2023 | £25,000 |
| Postgraduate | Master’s / doctoral loans | £21,000 (at 6%) |
Repayments come through payroll and are on top of tax and NI, so they effectively raise your marginal rate by 9 points.
Pensions and tax relief
Pension contributions get tax relief at your highest rate. With salary sacrifice you also save NI, which is why it’s usually the most efficient way to save. See worked examples. Under auto-enrolment you contribute at least 5% of qualifying earnings and your employer at least 3%.
The £100,000 trap
Between £100,000 and £125,140 your Personal Allowance is withdrawn, creating an effective Income Tax rate of 60% (62% with NI). For parents it can also remove tax-free childcare and funded childcare hours. Pension contributions and Gift Aid reduce the income that counts. Read the full £100k guide.
Worked example: £35,000
| Step | Amount |
|---|---|
| Salary | £35,000 |
| Personal Allowance | £12,570 |
| Taxable income | £22,430 |
| Income Tax at 20% | £4,486 |
| National Insurance: 8% of £22,430 | £1,794.40 |
| Take-home pay | £28,720 |
| Per month | £2,393 |
| Per week | £552 |
Take-home pay at every level
| Salary | England, Wales & NI | Per month | Scotland | Per month |
|---|---|---|---|---|
| £20,000 | £17,920 | £1,493 | £17,959 | £1,497 |
| £30,000 | £25,120 | £2,093 | £25,155 | £2,096 |
| £40,000 | £32,320 | £2,693 | £32,255 | £2,688 |
| £50,000 | £39,520 | £3,293 | £38,024 | £3,169 |
| £60,000 | £45,357 | £3,780 | £43,607 | £3,634 |
| £80,000 | £56,957 | £4,746 | £54,657 | £4,555 |
| £100,000 | £68,557 | £5,713 | £65,257 | £5,438 |
| £125,140 | £78,111 | £6,509 | £72,925 | £6,077 |
| £150,000 | £91,286 | £7,607 | £85,355 | £7,113 |
How to check your payslip
- Check the tax code is 1257L (or S1257L in Scotland) unless you know why it differs.
- Check gross pay includes overtime, bonuses and any salary-sacrifice reductions you agreed.
- Multiply by 12 (monthly pay) and enter it in the calculator. Tax and NI should be close to 1/12 of the annual figures.
- Check year-to-date totals on your final payslip and your P60 after the tax year ends.
- If something looks wrong, contact your payroll team first, then HMRC.
Ways to pay less tax legally
- Use salary sacrifice for pension contributions, and for electric cars or cycle-to-work where your employer offers them.
- Claim the Marriage Allowance if one partner earns under £12,570.
- Claim tax relief on work expenses you aren’t reimbursed for, such as professional subscriptions and uniform cleaning.
- Use your ISA allowance so savings interest and investment growth stay tax-free.
- Manage income around £50,270, £60,000–£80,000 (Child Benefit charge) and £100,000.
Bonuses, overtime and pay rises
Bonuses and overtime are added to your pay in the month they’re paid and taxed at your marginal rate, with NI too. Because PAYE treats that month as if it were typical, the deduction can look high, but it usually balances over the year. See a worked bonus example. A pay rise is never “wasted” by moving into a higher band, except in the £100,000–£125,140 trap.
Benefits in kind
Company cars, private medical insurance and some loans are taxable benefits. HMRC usually collects the tax by reducing your tax code (or via payrolling), so your take-home falls even though your salary doesn’t change. Electric company cars still have low benefit-in-kind rates compared with petrol and diesel cars, which is why EV salary-sacrifice schemes are popular.
Second jobs
Your Personal Allowance is normally used against your main job, so a second job is taxed from the first pound, usually with a BR code (20%). If your main job doesn’t use all your allowance, ask HMRC to split it. NI is calculated separately for each job, so two small jobs can mean less NI than one job with the same total pay.
Key dates in the 2026/27 tax year
| Date | What happens |
|---|---|
| 6 April 2026 | Tax year starts, new rates and thresholds apply |
| 31 May 2026 | Deadline for employers to give you your P60 for 2025/26 |
| 6 July 2026 | P11D (benefits) deadline |
| 5 October 2026 | Register for Self Assessment if you had untaxed income in 2025/26 |
| 31 January 2027 | Self Assessment deadline for 2025/26 returns |
| 5 April 2027 | Last day of the tax year: use ISA and pension allowances before this |
Common mistakes
- Not checking your tax code after a job change, which leads to emergency tax for months.
- Missing Marriage Allowance or work-expense relief that can be backdated four years.
- Crossing £100,000 without using pension contributions to protect your allowance.
- Assuming student loan repayments stop automatically. Check your balance once you’re close to paying it off.
Income cliffs that affect families
Two thresholds hit families harder than the tax bands themselves:
- High Income Child Benefit Charge: if either partner’s adjusted net income is over £60,000, Child Benefit is gradually clawed back, 1% for every £200, until it’s fully repaid at £80,000.
- £100,000 and childcare: above £100,000 adjusted net income you lose Tax-Free Childcare (up to £2,000 per child a year) and funded childcare hours for working parents.
Pension contributions and Gift Aid reduce adjusted net income for both tests, so they’re the main way to stay under the cliffs.
Frequently asked questions
When does the 2026/27 tax year end?
5 April 2027. The 2027/28 tax year starts on 6 April 2027.
Why did I pay emergency tax?
When HMRC doesn’t yet have your details (often in a new job), employers use an emergency code. It’s usually corrected automatically within a few pay periods, with any overpayment refunded.
Is National Insurance charged on pensions?
No. NI isn’t charged on pension income or on employer pension contributions.
Do I pay tax on overtime and bonuses?
Yes, they’re added to your pay and taxed through PAYE at your marginal rate, with NI too.
How do I claim back overpaid tax?
HMRC usually refunds it automatically after the tax year. You can also claim through your personal tax account.
