Question 1

What are the UK income tax rates for 2025/26?

Accepted Answer

The rates are: 0% on the first £12,570 (personal allowance), 20% on £12,571–£50,270 (basic rate), 40% on £50,271–£125,140 (higher rate), and 45% above £125,140 (additional rate). Scotland has different rates.

Question 2

What is the personal allowance taper?

Accepted Answer

If your income exceeds £100,000, your personal allowance is reduced by £1 for every £2 over £100,000. This creates an effective 60% marginal tax rate between £100,000 and £125,140.

Question 3

How can I reduce my income tax bill?

Accepted Answer

Common strategies include: pension contributions (which extend your basic rate band), Gift Aid donations, salary sacrifice arrangements, and ensuring you claim all available allowances. If you're between £100,000–£125,140, pension contributions can be especially valuable due to the 60% effective rate.

Question 4

What is the difference between marginal rate and effective rate?

Accepted Answer

Your marginal rate is the tax rate on your next pound of income. Your effective rate is the overall percentage of your total income that goes to tax. For example, someone earning £50,000 has a 40% marginal rate but an effective rate of about 17.4%.

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