The Income Tax rates and allowances for the 2026/27 tax year are largely unchanged from 2025/26.
The Personal Allowance – the amount you can earn before you begin to pay Income Tax – remains at £12,570. It reduces by £1 for every £2 of income above £100,000.
The basic rate of Income Tax of 20 per cent applies to the first £37,700 of income above the Personal Allowance. Income of £37,701 to £125,140 above the Personal Allowance is taxed at the higher rate (40 per cent), and income above that amount is taxed at the additional rate (45 per cent).
Those who pay basic-rate Income Tax have a Personal Savings Allowance of £1,000, meaning they can receive up to £1,000 of interest without paying tax on it. For higher-rate taxpayers the Personal Savings Allowance is £500. No Personal Savings Allowance is available for additional-rate taxpayers. Interest above the Personal Savings Allowance is taxed at your usual rate of Income Tax.
A starting rate for savings of up to £5,000 is available if you earn less than £17,570, allowing you to receive interest without paying tax. The starting rate for savings reduces by £1 for every £1 of other income above the Personal Allowance.
No tax is payable on the first £500 of dividends received. Dividend income above this amount is taxed at 10.75 per cent for basic-rate taxpayers, 35.75 per cent for higher-rate taxpayers and 39.35 per cent for additional-rate taxpayers.
Tax-free allowances are also available for your first £1,000 of income from self-employment and your first £1,000 of income from property you rent.
