How Much Income Tax Do I Pay?
Your complete step-by-step guide to UK income tax for 2025-26 — with real examples at common salary levels.
Step 1: Understand What Gets Taxed
The UK uses a progressive income tax system. This means you do not pay the same rate on your entire salary — you pay different rates on different portions ("slices") of your income. The first slice is always tax-free.
For 2025-26, the Personal Allowance is £12,570. This is the amount of income you can earn without paying any income tax at all. Only the income above this threshold is "taxable income".
National Insurance (NI) is a separate charge on top of income tax, paid at 8% on earnings between £12,570 and £50,270, and 2% on earnings above £50,270. Both income tax and NI are deducted by your employer through the PAYE system before your salary reaches your bank account.
Step 2: The Tax Bands for 2025-26
Once you subtract the Personal Allowance, your remaining income is taxed in bands:
| 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 | Above £125,140 | 45% |
The total basic rate band is £37,700 wide (£50,270 minus £12,570). If your salary is £40,000, your taxable income is £27,430 (£40,000 minus the £12,570 Personal Allowance), all of which falls within the basic rate band — so you pay 20% on that entire amount: £5,486. Wait, we'll calculate it properly in the examples below.
Step 3: Worked Examples
Here are four of the most common salary levels with a full breakdown of income tax, National Insurance, and take-home pay for 2025-26 in England:
£25,000 Salary
Taxable income = £25,000 − £12,570 = £12,430. All of this falls in the basic rate band (20%).
- Income tax: £12,430 × 20% = £2,486
- National Insurance: (£25,000 − £12,570) × 8% = £12,430 × 8% = £994
- Net take-home: £25,000 − £2,486 − £994 = £21,520/year (£1,793/month)
- Effective tax rate (IT + NI combined): 14.0%
£35,000 Salary
Taxable income = £35,000 − £12,570 = £22,430. All basic rate (20%).
- Income tax: £22,430 × 20% = £4,486
- National Insurance: £22,430 × 8% = £1,794
- Net take-home: £35,000 − £4,486 − £1,794 = £28,720/year (£2,393/month)
- Effective tax rate: 17.9%
£50,000 Salary
Taxable income = £50,000 − £12,570 = £37,430. Just below the higher rate threshold.
- Income tax: £37,430 × 20% = £7,486
- National Insurance: £37,430 × 8% = £2,994
- Net take-home: £50,000 − £7,486 − £2,994 = £39,520/year (£3,293/month)
- Effective tax rate: 20.9%
£80,000 Salary
Here the higher rate (40%) kicks in. Taxable income = £80,000 − £12,570 = £67,430.
- Basic rate income tax: £37,700 × 20% = £7,540
- Higher rate income tax: (£67,430 − £37,700) × 40% = £29,730 × 40% = £11,892
- Total income tax: £7,540 + £11,892 = £19,432
- National Insurance: (£50,270 − £12,570) × 8% + (£80,000 − £50,270) × 2% = £3,016 + £595 = £3,611
- Net take-home: £80,000 − £19,432 − £3,611 = £56,957/year (£4,746/month)
- Effective tax rate: 28.8%
Summary Table: Key Salary Levels 2025-26
| Gross Salary | Income Tax | NI | Net Annual | Net Monthly | Effective Rate |
|---|---|---|---|---|---|
| £25,000 | £2,486 | £994 | £21,520 | £1,793 | 14.0% |
| £35,000 | £4,486 | £1,794 | £28,720 | £2,393 | 17.9% |
| £50,000 | £7,486 | £2,994 | £39,520 | £3,293 | 20.9% |
| £80,000 | £19,432 | £3,611 | £56,957 | £4,746 | 28.8% |
Key Points to Remember
Tax applies to slices, not your whole salary. A common misconception is that earning £50,271 means your entire salary is suddenly taxed at 40%. That is false. Only the pounds earned above £50,270 face the higher rate. Your first £12,570 remains tax-free regardless of your total income (unless you earn above £100,000).
Your tax code matters. The standard tax code for 2025-26 is 1257L, corresponding to the £12,570 Personal Allowance. If you have a different code on your payslip, your allowance may be higher or lower — check with HMRC or your employer.
Pension contributions reduce your taxable income. If you contribute to a workplace pension, your contributions are deducted from gross pay before tax is calculated, reducing your tax bill. A 5% contribution on a £40,000 salary (£2,000/year) saves £400 in income tax immediately.
Scotland is different. Scottish taxpayers have six tax bands instead of three, and above £43,663 they pay 42% rather than 40%. See our Scotland take-home calculator for Scotland-specific figures.
Frequently Asked Questions
How is income tax calculated in the UK?
UK income tax is calculated on taxable income — your gross earnings minus the Personal Allowance (£12,570 for 2025-26). You pay 20% on the first £37,700 of taxable income, 40% on the portion between £37,701 and £112,570, and 45% on anything above. The rates apply to each slice, not your full salary.
How much tax do I pay on a £35,000 salary?
On a £35,000 salary in England in 2025-26, you pay £4,486 in income tax and £1,794 in National Insurance, giving you take-home pay of £28,720 per year (£2,393/month).
Do I pay 40% tax on my whole salary if I earn over £50,270?
No. The 40% higher rate only applies to the portion of your income above £50,270. If you earn £55,000, only £4,730 is taxed at 40%; the rest is taxed at lower rates. Your effective overall rate will be much lower than 40%.