UK Tax FAQ
Answers to the most common questions about UK income tax, National Insurance, student loans, and more. All figures are based on the latest HMRC rates. Use the free calculator to get a personalised breakdown.
What are the UK income tax bands for 2026/27?
For 2026/27 (England, Wales and Northern Ireland), income tax is charged at 0% on the first £12,570 (Personal Allowance), 20% on income between £12,571 and £50,270 (Basic Rate), 40% on income between £50,271 and £125,140 (Higher Rate), and 45% on income above £125,140 (Additional Rate). Scottish taxpayers pay different rates set by the Scottish Parliament.
What is the Personal Allowance?
The Personal Allowance is the amount of income you can earn each year before you start paying income tax. For 2026/27, it is £12,570. If your adjusted net income exceeds £100,000, the Personal Allowance reduces by £1 for every £2 over that threshold, reaching zero at £125,140.
How does National Insurance work?
National Insurance (NI) is a tax on earnings that funds state benefits. For employees (Class 1 NI, category A) in 2026/27: you pay 0% on earnings up to £12,576, 8% on earnings between £12,577 and £50,268, and 2% on earnings above £50,268. NI is calculated monthly and is not affected by whether you are a Scottish taxpayer.
What is the £100K tax trap?
When your income exceeds £100,000, your Personal Allowance tapers away at a rate of £1 for every £2 earned above that threshold. This creates an effective marginal tax rate of 60% (or 62% including National Insurance) on income between £100,000 and £125,140. Pension contributions made via salary sacrifice can reduce your adjusted net income below £100,000 and eliminate this trap.
What is salary sacrifice and how does it save tax?
Salary sacrifice is an arrangement where you give up part of your gross salary in exchange for a non-cash benefit — most commonly a pension contribution. Because your gross salary is reduced before tax is calculated, you pay less income tax and National Insurance on the sacrificed amount. Your employer may also pass on some or all of their NI saving to you. The effective tax relief is at your marginal rate, which can be up to 62% for earners between £100,000 and £125,140.
How is Scottish income tax different?
Scottish income tax is set by the Scottish Parliament and applies to Scottish residents. For 2026/27, Scotland has five income tax bands: Starter Rate (19%) on income between £12,571 and £16,537; Basic Rate (20%) on £16,538–£29,526; Intermediate Rate (21%) on £29,527–£43,662; Higher Rate (42%) on £43,663–£75,000; and Top Rate (47%) on income above £75,000 (45% above £125,140). National Insurance rates are not devolved and are the same across the UK.
Which student loan plan am I on?
Your plan depends on when and where you started university. Plan 1 applies to English and Welsh students who started before September 2012, and all Northern Irish students. Plan 2 applies to English and Welsh students who started from September 2012. Plan 4 applies to Scottish students (undergraduate). Plan 5 applies to English students starting from August 2023. Postgraduate Loan (Plan 3) applies to masters and doctoral students. You can check your plan by logging into your Student Finance account.
What is the Marriage Allowance?
Marriage Allowance lets you transfer £1,260 of your Personal Allowance to your spouse or civil partner if you earn less than the Personal Allowance threshold (£12,570) and your partner pays the Basic Rate of income tax. This reduces your partner's tax bill by up to £252 per year. Both parties must be UK residents and not higher-rate taxpayers.
What is the Blind Person's Allowance?
The Blind Person's Allowance is an extra amount added to your Personal Allowance if you are registered as blind or severely sight-impaired. For 2026/27, it is £3,250, bringing the effective tax-free amount to £15,820. If you do not use the full allowance, you can transfer the unused portion to a spouse or civil partner.
How does Gift Aid affect my income tax?
Gift Aid allows charities to reclaim 20% basic rate tax on your donations, boosting each £1 donated to £1.25. If you pay higher or additional rate tax, you can claim further relief through Self Assessment — the difference between the basic rate and your marginal rate on the grossed-up donation. Gift Aid donations also reduce your adjusted net income, which can partially restore a tapered Personal Allowance.
What does my tax code mean?
Your tax code tells your employer how much tax to deduct. The most common code is 1257L, which means you have the standard £12,570 Personal Allowance. The number indicates the allowance divided by ten. Letters after the number indicate special circumstances: L means standard allowance; M means Marriage Allowance received; N means Marriage Allowance transferred; BR, D0, or D1 mean a flat rate applies (20%, 40%, or 45% respectively). If your code is wrong, contact HMRC to have it corrected.
Do I need to complete a Self Assessment tax return?
You must complete a Self Assessment return if you are self-employed with income over £1,000; a company director; earn over £100,000; have untaxed income (e.g. rental income over £2,500, savings interest, or dividends above the threshold); or need to claim certain reliefs not available through PAYE. The deadline for online returns is 31 January following the end of the tax year. HMRC's Check if you need to send a Self Assessment tax return tool on GOV.UK can confirm whether you need to file.
Where can I find my UTR number?
Your Unique Taxpayer Reference (UTR) is a ten-digit number issued by HMRC. You can find it on previous Self Assessment returns, your Welcome to Self Assessment letter, or any HMRC correspondence. It is also visible in your Personal Tax Account at gov.uk. If you cannot locate it, contact HMRC directly — they will verify your identity before disclosing it.