Income Tax

Tax Rates 2025/26

 

Introduction
Income Tax
Pensions
Annual investment limits
National Insurance Contributions
Vehicle Benefits
Tax-free mileage allowances
Capital Gains Tax
Corporation Tax
Main capital allowances
Property Taxes
Value Added Tax
Inheritance Tax
Key dates and deadlines
Useful rates
National minimum wage

Income Tax

Allowances 2025/26 2024/25
Personal Allowance (PA)* £12,570 £12,570
Marriage Allowance† 1,260 1,260
Blind Person's Allowance 3,130 3,070
Rent-a-room relief** 7,500 7,500
Trading income allowance** 1,000 1,000
Property income allowance** 1,000 1,000

*PA is withdrawn at £1 for every £2 by which ‘adjusted income’ exceeds £100,000. There is no allowance given above £125,140.

†The part of the PA that is transferable to a spouse or civil partner who is not a higher or additional rate taxpayer.

** If gross income exceeds this, the limit may be deducted instead of actual expenses.


Rate bands 2025/26 2024/25
Basic Rate Band (BRB) £37,700 £37,700
Higher Rate Band (HRB) 37,701 – 125,140 37,701 – 125,140
Additional rate over 125,140 over 125,140
Personal Savings Allowance (PSA)
– Basic rate taxpayer 1,000 1,000
– Higher rate taxpayer 500 500
Dividend Allowance (DA) 500 1,000

BRB and additional rate threshold are increased by personal pension contributions (up to permitted limit) and Gift Aid donations

Tax rates 2025/26 2024/25
Rates differ for General/Savings/Dividend income
  G S D G S D
Basic rate % 20 20 8.75 20 20 8.75
Higher rate % 40 40 33.75 40 40 33.75
Additional rate % 45 45 39.35 45 45 39.35

General income (salary, pensions, business profits, rent) usually uses personal allowance, basic rate and higher rate bands before savings income (mainly interest). Scottish taxpayers are taxed at different rates on general income (see below).

Where savings income falls in the first £5,000 of the BRB, it is taxed at nil rather than 20%.

The PSA taxes interest at nil, where it would otherwise be taxable at 20% or 40%.

Dividends are normally taxed as the ‘top slice’ of income. The DA taxes the first £500 of dividend income at nil, rather than the rate that would otherwise apply.


Income tax – Scotland   2025/26 2024/25
Starter rate 19% £2,827 £2,306
Basic rate 20% 2,828 – 14,921 2,307 – 13,991
Intermediate rate 21% 14,922 – 31,092 13,992 – 31,092
Higher rate 42% 31,093 – 62,430 31,093 – 62,430
Advanced rate 45% 62,431 – 125,140 N/A
Top rate 48% over 125,140 125,140

Savings and dividend income are taxed at normal UK rates.

High Income Child Benefit Charge (HICBC)

1% of child benefit for each £200 of adjusted net income between £60,000 and £80,000.


New UK residents

From 2025/26, those who are in their first 4 years of UK residence, having been non-resident for the previous 10 years, can claim to have most types of foreign income exempt from UK tax for the year. A similar claim is available for foreign capital gains.

In prior years, ‘remittance basis’ was available for UK residents who were neither UK-domiciled nor deemed domiciled. If claimed, foreign income or gains were only taxable in the UK if remitted here. Remittance basis users with unremitted income or gains can use the Temporary Repatriation Facility in 2025/26 to 2027/28. This allows them to be taxed at a favourable rate (12% or 15%) on designated income or gains; otherwise, their unremitted income and gains become taxable at normal rates when remitted to the UK.