UK Income Tax and National Insurance 2026/27: How Your Take-Home Pay Is Worked Out
UK employees pay two main deductions on their salary: Income Tax and National Insurance. Both are taken through PAYE before you are paid, and both use bands. This guide sets out the 2026/27 rates for England, Wales and Northern Ireland and walks through a full take-home pay calculation.
Key takeaways
- The Personal Allowance is £12,570 in 2026/27; Income Tax is 20%, 40% and 45% above it.
- Employee National Insurance is 8% between £12,570 and £50,270, and 2% above that.
- On a £45,000 salary, take-home pay is about £35,920 a year, or £2,993 a month, before pension contributions.
- Between £100,000 and £125,140, the Personal Allowance is withdrawn, creating an effective 60% Income Tax rate.
Income Tax bands for 2026/27
| Band | Taxable income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
The basic-rate band covers the first £37,700 of income above your Personal Allowance. These thresholds are frozen, so as wages rise, more of your income moves into the higher bands each year, a process often called fiscal drag. Scotland has different bands and rates for earned income.
Employee National Insurance for 2026/27
| Annual earnings | Class 1 employee rate |
|---|---|
| Up to £12,570 (Primary Threshold) | 0% |
| £12,570 to £50,270 (Upper Earnings Limit) | 8% |
| Over £50,270 | 2% |
National Insurance is worked out on each pay period separately, not over the year. If your pay varies month to month, the annual total can differ slightly from a calculation on annual salary.
Worked example: a £45,000 salary
- Income Tax: £45,000 − £12,570 = £32,430 taxable, all within the basic-rate band. 20% × £32,430 = £6,486.00.
- National Insurance: 8% × (£45,000 − £12,570) = 8% × £32,430 = £2,594.40.
- Take-home pay: £45,000 − £6,486.00 − £2,594.40 = £35,919.60 a year, or about £2,993 a month.
| Salary | Income Tax | National Insurance | Take-home (year) | Take-home (month) |
|---|---|---|---|---|
| £30,000 | £3,486 | £1,394 | £25,120 | £2,093 |
| £45,000 | £6,486 | £2,594 | £35,920 | £2,993 |
| £60,000 | £11,432 | £3,211 | £45,357 | £3,780 |
| £100,000 | £27,432 | £4,011 | £68,557 | £5,713 |
These figures assume the 1257L tax code, England, Wales or Northern Ireland, and no pension contributions, student loan repayments or benefits in kind.
Enter your salary and pension contribution to see your monthly take-home pay, Income Tax and National Insurance.
The £100,000 trap
Once your adjusted net income goes above £100,000, your Personal Allowance is reduced by £1 for every £2 of income, until it disappears at £125,140. Each extra £1 in that range is taxed at 40% and also removes 50p of tax-free allowance, which is then taxed at 40% too: an effective Income Tax rate of 60%, plus 2% National Insurance.
Moving from £100,000 to £110,000, for example, increases Income Tax by £6,000 on £10,000 of extra pay. Pension contributions reduce adjusted net income, so paying more into a pension in this band can recover the allowance and is one of the most tax-efficient moves available. If you have children, this income range also affects tax-free childcare eligibility.
Other deductions on your payslip
- Workplace pension: auto-enrolment requires a minimum of 8% of qualifying earnings in total, with at least 3% from your employer. How the employee share affects tax depends on the scheme type.
- Student loan repayments: a percentage of earnings above your plan’s threshold.
- Benefits in kind, such as private medical insurance, can reduce your tax code.
Checking your payslip
Compare your tax code with HMRC’s record in your personal tax account, check that pension and student loan deductions match your plan, and look out for emergency codes such as 1257L W1 or M1 after a job change. If too much tax was taken, HMRC normally refunds it automatically or adjusts your code.
For pensions and retirement income, see how much you need to retire. Buying a home? Read UK Stamp Duty explained.
Frequently asked questions
What is my tax code 1257L?
It is the most common code. The number is your tax-free Personal Allowance divided by 10 (£12,570), and L means you get the standard allowance. A different code usually means an adjustment for benefits, untaxed income or underpaid tax.
Do pension contributions reduce National Insurance?
Only through salary sacrifice. Contributions taken from pay under “net pay” or “relief at source” reduce income tax but not employee National Insurance. Salary sacrifice reduces both.
Are Scottish tax rates different?
Yes. Scotland sets its own income tax bands and rates on earnings, with six bands from 19% to 48%. National Insurance is the same across the UK.
Do I pay National Insurance after State Pension age?
No. Employees stop paying Class 1 National Insurance once they reach State Pension age, although income tax continues.
Sources
- GOV.UK: Income Tax rates and Personal Allowances
- GOV.UK: National Insurance rates and categories
- GOV.UK: Income over £100,000
- GOV.UK: Scottish Income Tax
This guide is general information to help you understand the numbers. It is not financial, tax or legal advice. Rates, limits and rules change, so check official sources or a qualified adviser before making a decision. Read our full disclaimer.