UK Income Tax & NI Calculator 2025/26
Calculate your take-home pay, income tax, and National Insurance for the 2025/26 tax year.
Your Income Details
Enter your gross (before tax) annual income. Include salary, bonuses, and any other PAYE income.
Before tax and National Insurance
Reduces your taxable income (salary sacrifice only)
UK Income Tax Rates for 2025/26
The UK uses a progressive income tax system. You pay different rates on different portions of your income, not a flat rate on all of it.
| Band | Income Range | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571–£50,270 | 20% |
| Higher Rate | £50,271–£125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
The £100,000 Trap — 60% Effective Tax
One of the most important concepts for higher earners in the UK FIRE community is the Personal Allowance taper. For every £2 of income above £100,000, you lose £1 of your tax-free Personal Allowance. This creates an effective marginal tax rate of 60% on income between £100,000 and £125,140.
The solution for FIRE pursuers: make enough pension contributions (via salary sacrifice) to bring your adjusted net income below £100,000. Every pound of pension contribution in this band saves you 60p in tax — an immediate 60% return before any investment growth. This is one of the most valuable tax optimisation strategies available in the UK.
Why Your Tax Rate Matters for FIRE
Understanding your marginal tax rate is essential for FIRE planning in the UK because it determines which savings strategy is most efficient:
- Basic rate (20%): ISA and SIPP are equally efficient on a like-for-like basis. Prioritise ISA for flexibility if planning early retirement.
- Higher rate (40%): SIPP is more efficient — the 40% tax relief means every £600 you contribute buys £1,000 in your pension. Prioritise SIPP up to the income tax boundary.
- Additional rate (45%) or 60% trap: Maximise pension contributions to escape the additional rate or the £100,000 trap before contributing to ISA.
Frequently Asked Questions
What are the UK income tax rates for 2025/26?
0% on income up to £12,570 (Personal Allowance), 20% on £12,571–£50,270, 40% on £50,271–£125,140, and 45% above £125,140. The effective marginal rate is 60% between £100,000 and £125,140 due to Personal Allowance tapering.
What are the National Insurance rates for 2025/26?
Employees pay 8% NI on earnings from £12,570 to £50,270, and 2% above. NI contributions count towards your State Pension and certain benefits entitlement.
How do pension contributions reduce my tax bill?
Salary sacrifice reduces your gross income before both income tax and NI are calculated. A higher rate taxpayer contributing £10,000 saves £4,000 income tax plus £200 NI = £4,200 saved, making their effective cost only £5,800 for £10,000 in their pension.
What is the 60% tax trap?
For income between £100,000 and £125,140, the Personal Allowance is tapered away at £1 per £2 of income over £100,000. Combined with the 40% higher rate, this creates an effective marginal rate of 60%. Pension contributions can eliminate this trap entirely.
This calculator is based on 2025/26 UK tax rates. It covers England, Wales, and Northern Ireland income tax rates. Scotland has different income tax rates set by the Scottish Government. This calculator does not account for all tax reliefs, student loan repayments, or other deductions. For advice specific to your circumstances, consult a qualified financial adviser or accountant.
Related Calculators
- UK Savings Rate Calculator — see how your savings rate affects your FIRE timeline
- ISA vs SIPP Calculator UK — compare tax wrapper strategies
- Side Hustle Tax Calculator UK — calculate tax on self-employment income
- All UK FIRE Calculators
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