Guide

UK Income Tax in plain English for 2026/27.

Income Tax feels confusing because people often hear only the top rate that applies to part of their pay. In reality, most employees are taxed in layers, not all at one single percentage.

Personal allowance first

The standard personal allowance is the amount of income you can earn before regular Income Tax starts. For many people this is the first major piece of the puzzle because it explains why tax does not begin from pound one.

Tax bands stack on top

After the personal allowance, income moves through bands. In England, Wales, and Northern Ireland, higher rates apply only to the slice of pay inside that band. Scotland uses a different set of bands, which is why region matters in a calculator.

Marginal rate versus effective rate

Your marginal rate is the rate that applies to the next pound you earn. Your effective rate is what you paid overall across your income. That is why someone can talk about being in a higher-rate band while still keeping most of their pay.

Why the £100,000 range matters

Above £100,000, the standard personal allowance is gradually reduced. This creates a sharper effective marginal rate in that range, which catches many people by surprise when they compare pay rises or bonuses.

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