How UK Income Tax & National Insurance work in 2025/26

When a UK job advert says “£45,000 a year,” that is your gross salary — the figure before the government takes its share. What actually lands in your bank account is your net or take-home pay, and the gap between the two comes down to just two deductions: Income Tax and National Insurance. This guide explains exactly how each one works for the 2025/26 tax year, so the number on your payslip stops being a mystery.

The Personal Allowance: your tax-free slice

Everyone starts with a Personal Allowance— an amount you can earn each year before paying any Income Tax at all. For 2025/26 it is £12,570, the same as it has been since 2021/22 (the figure is frozen until at least 2028, which quietly pulls more people into higher tax as wages rise — the so-called fiscal drag). Earn below £12,570 and you pay no Income Tax; everything above it is taxed in three bands.

The three Income Tax bands

Income Tax in England, Wales and Northern Ireland is marginal: each band only taxes the slice of income that falls inside it, not your whole salary. For 2025/26 the rates are:

• Basic rate — 20%on income from £12,571 to £50,270.
• Higher rate — 40%on income from £50,271 to £125,140.
• Additional rate — 45%on income above £125,140.

The marginal design is the single most misunderstood part of UK tax. Crossing into the 40% band does notmean 40% of your whole salary disappears — only the pounds above £50,270 are taxed at 40%. A pay rise that nudges you into the higher band always leaves you better off overall; you simply keep a little less of each extra pound. See marginal rate versus effective rate for why the headline band rarely matches the percentage you actually lose.

The £100,000 trap

There is one nasty kink. Once your income passes £100,000, your Personal Allowance is withdrawn by £1 for every £2 you earn above it — gone entirely by £125,140. Because you lose tax-free allowance andpay 40% on the income at the same time, every pound between £100,000 and £125,140 is effectively taxed at 60%. It is the highest marginal rate in the UK system, higher than the 45% additional rate above it, and it is why many people earning just over £100,000 pay extra into a pension to dip back below the threshold.

National Insurance: the second deduction

Income Tax is only half the story. Employees also pay Class 1 National Insurance (NI), which funds the state pension and benefits. It has its own thresholds, separate from Income Tax, and for 2025/26 employees pay:

• Nothingon earnings up to the Primary Threshold of £12,570 a year.
• 8%on earnings between £12,570 and the Upper Earnings Limit of £50,270.
• 2%on everything above £50,270.

Note the quirk: NI is the one deduction that gets lighterat the top, dropping from 8% to 2% once you pass £50,270. That partly offsets the jump into the 40% Income Tax band at the same point. NI is normally calculated per pay period (per week or per month), not annually, which is why a large one-off bonus can be hit harder than the annual figures suggest. See National Insurance for the full breakdown.

Putting it together: £50,000 worked through

On a £50,000 salary in 2025/26 (rUK, standard tax code, no pension or student loan):

• Income Tax:the first £12,570 is tax-free; the remaining £37,430 sits entirely in the basic-rate band, taxed at 20% → about £7,486.
• National Insurance:8% on the £37,430 between £12,570 and £50,000 → about £2,994.
• Take-home: roughly £39,500a year, or about £3,290 a month — an effective tax-plus-NI rate near 21%.

You can see this exact calculation, with the live engine and the full month-by-month breakdown, on the £50,000 take-home pay page, or try your own figure on the UK take-home pay calculator.

Scotland is different

Income Tax on earnings is devolved to the Scottish Parliament, so if you are a Scottish taxpayer your bands are not the ones above. Scotland runs a steeper, six-band system (a 19% starter rate, then intermediate, higher, advanced and top rates rising to 48%), with thresholds that diverge from the rest of the UK. National Insurance, however, is notdevolved — the 8%/2% rules apply UK-wide. On mytakehomepay.app you can switch to the Scottish schedule using the region selector on the UK calculator.

What this means for your pay

For most employees, Income Tax and National Insurance together explain the entire difference between the salary you negotiated and the money that arrives each month. Two practical takeaways: think in net, not grosswhen you compare offers or plan a budget, and remember that pension contributions made before tax are one of the few legal levers that move you down a band — especially around £50,270 and the £100,000 trap.

Every figure here is for the 2025/26 tax year and a standard tax code; your own code, student-loan plan, pension scheme or benefits-in-kind will shift the numbers. For how we verify each result against HMRC, see our methodology, and for what the codes on your payslip mean, read UK tax codes explained.