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%.