Question 1

What are the UK income tax rates for 2026/27?

Accepted Answer

For taxpayers in England, Wales and Northern Ireland: 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). TaxBrain currently serves England, Wales and Northern Ireland only — Scottish residents pay different rates set by the Scottish Parliament and aren't in scope yet.

Question 2

How do pension contributions reduce income tax?

Accepted Answer

Pension contributions are made from pre-tax income, so they directly reduce your taxable income. For a higher-rate taxpayer a £1,000 pension contribution saves £400 in tax. For someone in the £100k–£125,140 taper band the effective saving is 60p in the pound. This is why making pension contributions is often the first planning step recommended.

Question 3

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. Pension contributions reduce your adjusted net income and can restore some or all of your personal allowance.

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 on income above £50,270 but an effective rate of around 17%. The effective rate is what matters for comparing take-home pay; the marginal rate is what matters for planning decisions.

Question 5

What income counts for income tax purposes?

Accepted Answer

Most income is taxable: employment income, self-employment profits, rental income, pension income, and most benefits in kind. Some income is exempt: ISA interest and dividends, the first £1,000 of savings interest (basic rate taxpayers), and the £500 dividend allowance. Enter your taxable income only — exclude ISA income.

Income Tax Calculator 2026/27

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