Income Tax Calculator UK 2026/27

How to Use This Calculator

• Enter your total annual income from all sources, salary, self-employment, rental income, dividends, savings interest
• Select your tax region, England, Wales, Northern Ireland or Scotland
• Add any pension contributions or Gift Aid donations to reduce your taxable income
• Click Calculate

Your result shows a full breakdown of income tax by band, your effective tax rate and a comparison across all income sources.

UK Income Tax Bands and Rates 2026/27

Income tax in England, Wales and Northern Ireland is calculated in slices. You do not pay the same rate on your entire income, each portion is taxed only at the rate for that band.

For 2026/27, income tax thresholds are frozen and identical to 2025/26. The personal allowance is £12,570, basic rate 20% applies up to £50,270, higher rate 40% applies to £125,140 and the additional rate of 45% applies above that.

Source: HMRC Income Tax rates and allowances, confirmed for 2026/27.

The Personal Allowance

The personal allowance is the amount of income you can earn each tax year without paying any income tax. For 2026/27 it is £12,570, unchanged since 2022/23.

For every £2 earned over £100,000, taxpayers lose £1 from their personal allowance. The allowance is completely eroded at £125,140, where the effective marginal tax rate reaches 60% on income within that range.

Most PAYE employees receive the personal allowance automatically through their tax code, typically 1257L. Self-employed people claim it through their Self Assessment tax return.

You may have a reduced personal allowance if your income is over £100,000 or an increased allowance if you claim Marriage Allowance or Blind Person's Allowance.

Scottish Income Tax 2026/27

Scotland sets its own income tax rates and bands on non-savings, non-dividend income through Holyrood. National Insurance rates remain UK-wide.

The Scottish Starter rate band has increased to £16,537 and the Basic rate band has risen to £29,526 for 2026/27. The Intermediate, Higher, Advanced and Top rate thresholds remain frozen.

Source: Scottish Government, 2026/27.

Scottish tax bands only apply to earned and pension income. The UK-wide rates apply to savings and dividend income even for Scottish taxpayers.

What Changed for 2026/27

The key changes for the 2026/27 tax year include: dividend income tax rates increased by 2% at basic and higher rates; Making Tax Digital launched for self-employed people and landlords with income over £50,000; the Business Asset Disposal Relief rate for capital gains increased; and income tax rates and thresholds in England, Wales and Northern Ireland remain frozen.

Key changes at a glance:

• Dividend tax rates increased by 2% at basic and higher rate (see below)
• Making Tax Digital launched for self-employed and landlords with qualifying income over £50,000
• Business Asset Disposal Relief CGT rate increased to 18%
• Income tax thresholds frozen in England, Wales, and Northern Ireland, extended to 2031
• Scottish income tax, small increases to Starter and Basic rate band thresholds
• ISA rules, new £12,000 annual cash ISA sub-limit introduced for under-65s

Dividend Tax : 2026/27 Rates and Allowance

If you receive income from company shares held outside an ISA or pension, dividend tax applies above the annual dividend allowance.

From 6 April 2026, tax payable on dividend income increased: basic rate taxpayers now pay 10.75% (up from 8.75%), higher rate taxpayers pay 35.75% (up from 33.75%). The additional rate remains at 39.35%. The dividend allowance remains unchanged at £500.

The first £500 of dividend income each year is tax-free, this is the dividend allowance. Dividends above this are taxed at the rates above depending on your total income.

Dividends held within an ISA or pension are entirely free of dividend tax, making tax-efficient wrappers particularly valuable as the dividend allowance has fallen from £2,000 in 2023/24 to £500 today.

Capital Gains Tax 2026/27

Capital Gains Tax (CGT) applies when you sell an asset that has increased in value, including shares, investment property and some personal possessions above a certain value.

The annual CGT allowance for 2026/27 is £3,000, the amount of gains you can realise each tax year without paying CGT. Any gains above this are taxable.

There was a reduction in Business Asset Disposal Relief from 6 April 2026, meaning businesses now pay a higher rate of CGT when selling qualifying assets.

Gains within ISAs and pensions are entirely exempt from CGT. If you are close to the £3,000 threshold, transferring assets to a spouse or civil partner, who may have unused allowance, is a common and fully legitimate way to reduce a CGT liability.

Personal Savings Allowance

The Personal Savings Allowance (PSA) lets you earn interest on savings without paying income tax, up to an annual limit based on your tax band.

Basic rate taxpayers have a £1,000 tax-free band for non-ISA savings interest. Higher rate taxpayers can claim £500. Additional rate taxpayers receive no Personal Savings Allowance.

Interest above these thresholds is taxed at your marginal income tax rate. If your interest income is likely to exceed your PSA, holding savings in a Cash ISA keeps all interest completely tax-free, with no limit on the interest earned within the ISA.

ISA Allowance 2026/27

Individual Savings Accounts (ISAs) are the most widely used tax-free savings and investment wrapper in the UK. Income, interest, and gains within an ISA are completely exempt from income tax and CGT.

The overall ISA allowance remains at £20,000 per person for 2026/27. However, from 6 April 2026, individuals under 65 can only allocate up to £12,000 of their annual ISA allowance to cash, with the remainder able to be invested in stocks and shares or other permitted assets.

Unused ISA allowance cannot be carried forward, use it or lose it each tax year.

The Fiscal Drag Problem

This is a genuinely important concept that most income tax calculator pages fail to explain and it affects every UK taxpayer.

The tax-free personal allowance and income tax rate thresholds for England, Wales and Northern Ireland have remained unchanged since 2022/23 and this freeze has been extended until at least April 2031, nearly a decade without adjustment.

Income tax receipts as a proportion of GDP are at their highest level since the 1980s. An estimated 400,000 to 600,000 more taxpayers are being forced into the 40% income tax band in 2026/27 as earnings rise but thresholds stay static.

Fiscal drag works silently. If your salary rises with inflation but the basic rate threshold stays at £50,270, more of your income creeps into the higher rate band each year without any deliberate tax increase. Your payslip shows a pay rise; your take-home rises by less than it should.

The practical implication is that salary sacrifice pension contributions, ISA contributions and Marriage Allowance claims become more valuable every year as fiscal drag pushes more people into higher bands.

Marriage Allowance

Marriage Allowance allows a lower-earning spouse or civil partner to transfer part of their personal allowance to their higher-earning partner, reducing the couple's combined tax bill.

You can claim Marriage Allowance if:

• You are married or in a civil partnership
• One partner earns below the personal allowance threshold (below £12,570)
• The other partner is a basic rate taxpayer (income between £12,571 and £50,270)

The lower earner can transfer £1,260 of their personal allowance, saving the higher earner £252 per year in income tax.

You can also backdate a Marriage Allowance claim for up to four previous tax years, potentially worth over £1,000 as a lump sum. Claims are made through your HMRC Personal Tax Account at gov.uk.

Making Tax Digital

From 6 April 2026, Making Tax Digital (MTD) launched for self-employed workers and landlords with combined qualifying income over £50,000. Under MTD, these taxpayers must file tax information quarterly using HMRC-approved software rather than through a single annual Self Assessment return.

MTD will expand in April 2027 to include taxpayers with qualifying income over £30,000. A new penalty regime will also apply for late returns and late payments from that point.

If you are self-employed or a landlord and your income is below £50,000, MTD does not apply to you yet for 2026/27, but it is worth familiarising yourself with the requirements ahead of the April 2027 expansion.

HMRC-approved MTD software includes QuickBooks, Xero, FreeAgent and several other accounting platforms. Many are available with free tiers for basic sole trader use.

Do You Need to Submit a Self Assessment?

PAYE employees have income tax deducted automatically by their employer. But you may need to submit a Self Assessment return if any of the following apply:

• Your self-employment or freelance income exceeds £1,000 in the tax year
• Your total income is above £100,000 (personal allowance taper)
• You have untaxed income from savings interest above your PSA
• You receive rental income above your £1,000 property allowance
• Your dividend income above the £500 allowance is not already taxed through PAYE
• You are a company director
• You or your partner receives Child Benefit and either of you earns over £60,000

The deadline for online Self Assessment returns for the 2025/26 tax year is 31 January 2027. Paper returns must be submitted by 31 October 2026. Missing the January deadline incurs an automatic £100 penalty even if no tax is owed.

Register for Self Assessment at gov.uk if you are not already registered. Do this as early as possible, HMRC can take several weeks to process new registrations and issue your Unique Taxpayer Reference (UTR) number.

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