Income tax

Estimate your personal income tax liability using the current rates. View the current rates here.

Rates

Income tax applies to the amount of income after deduction of personal allowances.

Income is taxed in a specific order with savings and dividend income taxed last.

Dividend income and savings income falling within the dividend and savings allowances still form part of total income of an individual.

The starting rate band is only applicable to savings income. The 0% rate is not available if the taxable amount of non-savings income exceeds the starting rate band.

The Scottish Parliament set the rates of income tax and the limits at which these rates apply for Scottish residents on non-savings and non-dividend income.

Income tax is devolved to Wales on non-savings and non-dividend income. Welsh resident taxpayers continue to pay the same overall income tax rates using the UK rates and bands. The total rate of income tax = UK income tax + Welsh rate of income tax. Savings income and dividend income are taxed using UK tax rates and bands.

2025/26:

Type Band of taxable income (£) Rate (%) Rate if dividends (%)
Basic rate 0 - 37,700 20 8.75
Higher rate 37,701 - 125,140 40 33.75
Additional rate Over 125,140 45 39.35

For Scottish residents the following bands apply for non-savings and non-dividend income:

Type Band of taxable income (£) Rate (%)
Starter rate 0 - 2,827 19
Basic rate 2,828 - 14,921 20
Intermediate rate 14,992 - 31,092 21
Higher rate 31,093 - 62,430 42
Advanced rate 62,431 - 125,140 45
Top rate Over 125,140 48

For Welsh residents the following bands apply for non-savings and non-dividend income:

Band of taxable income (£) UK Rate (%) Welsh Rate (%) Overall Rate (%)
0 - 37,700 10 10 20
37,701 - 125,140 30 10 40
Over 125,140 35 10 45

There are special rates for savings and dividend income falling into above bands of taxable income.

Savings Allowance:

Band of taxpayer Amount (£) Rate (%)
Basic rate 1,000 0
Higher rate 500 0
Additional rate 0 N/a

Dividend Allowance:

Band of taxpayer Amount (£) Rate (%)
All 500 0

2024/25:

Type Band of taxable income (£) Rate (%) Rate if dividends (%)
Basic rate 0 - 37,700 20 8.75
Higher rate 37,701 - 125,140 40 33.75
Additional rate Over 125,140 45 39.35

For Scottish residents the following bands apply for non-savings and non-dividend income:

Type Band of taxable income (£) Rate (%)
Starter rate 0 - 2,306 19
Basic rate 2,307 - 13,991 20
Intermediate rate 13,992 - 31,092 21
Higher rate 31,093 - 62,430 42
Advanced rate 62,431 - 125,140 45
Top rate Over 125,140 48

For Welsh residents the following bands apply for non-savings and non-dividend income:

Band of taxable income (£) UK Rate (%) Welsh Rate (%) Overall Rate (%)
0 - 37,700 10 10 20
37,701 - 125,140 30 10 40
Over 125,140 35 10 45

There are special rates for savings and dividend income falling into above bands of taxable income.

Savings Allowance:

Band of taxpayer Amount (£) Rate (%)
Basic rate 1,000 0
Higher rate 500 0
Additional rate 0 N/a

Dividend Allowance:

Band of taxpayer Amount (£) Rate (%)
All 500 0

Allowances

A personal allowance gives an individual an annual amount of income free from income tax.

Income above the personal allowances is subject to income tax.

The personal allowance will be reduced if an individual's 'adjusted net income' is above £100,000. The allowance is reduced by £1 for every £2 of income above £100,000.

An individual born before 6 April 1935 may be entitled to a married couple's allowance but this is reduced if 'adjusted net income' is above the married couple's allowance income limit (see table below).

Marriage allowance - 10% of the personal allowance may be transferable between certain spouses where neither pays tax above the basic rate. The Marriage allowance is not available to couples entitled to the Married Couple's allowance.

Personal Allowance

Allowances 2025/26 (£) 2024/25 (£)
Personal allowance 12,570 12,570
Marriage allowance 1,260 1,260

Blind person's allowance

£3,130 (2024/25: £3,070)

Married couple's allowance

Either partner born before 6th April 1935.

Reduction in tax bill 2025/26 (£) 2024/25 (£)
Maximum 1,127 1,108
Minimum 436 428
Age allowance income limit 1 37,700 37,000

Note...

  1. Reduce married couples allowance by £1 for every £2 of 'adjusted net income' above this limit.

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After working with Nicholas Charles for a year, we brought him on to join our board advisory team for BankToTheFuture.com because of his unique combination of financial tax advice, commercial understanding and ability to introduce the right connections at the right time. Nicholas has provided tax advice to our investors, facilitated introductions to investors as well as help us to implement controls and procedures to get the right balance of compliance, responsible procedures and good business practices. If you want somebody that understands the commercials of business and deal making combined with the technical skills of finance, tax and increasing shareholder value, Nicholas Charles is your man.

Simon Dixon | CEO & Co-Founder BankToTheFuture.com
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Nicholas has been an active supporter of our charity, and the Charles Group have sponsored our last three summer parties. He understands family businesses like ours but more importantly the need to give back to the local community and the life changing differences that can be brought about by charities. This is why we quickly became a client of the Charles Group. Nicholas appreciates that having a purpose greater than the individual needs of members can bring a family closer together as well as inspire the next generation. We admire Nicholas’ authentic approach towards Family Prosperity.

Paul Strank MBE and Irene Strank MBE | Founders of Paul Strank Roofing and the Paul Strank Charitable Trust
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I have worked with the Charles Group for 2 years on some very exciting projects and his ability to listen, provide objective advice and support my goals and ambitions has been a tremendous asset to me and my businesses. Nicholas cares deeply about those he works with and seeks to ensure great outcomes for all.

Penny Power OBE | Serial Entrepreneur
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The Charles Group has been our trusted accountants since we founded B-Engaged in 2013. Over the years, they’ve become an integral part of our journey, consistently going above and beyond to help us save money, optimize our structures, and minimize tax liabilities. They are more than accountants—they are key partners in our success.

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From our early days as a startup to becoming one of the largest suppliers to Assos and River Island, The Charles Group has been a constant and invaluable partner. They’ve played a vital role in reducing our overheads, analysing and advising on client profitability, setting up our internal bookkeeping systems, and providing invaluable business guidance. Their expertise has also helped us manage and reduce our growing tax liabilities. The team at The Charles Group has truly become part of our business family.

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