How UK tax works, in one page
Two separate deductions come out of a UK salary, and they do not share the same rules. Income Tax is charged on everything above your Personal Allowance of £12,570: 20% on the next £37,700 of taxable income, 40% above that, and 45% once taxable income passes £125,140. National Insurance is charged separately at 8% between £12,570 and £50,270, then drops to just 2% above £50,270 — so NI actually gets lighter as a proportion of pay as you earn more, which is why your marginal rate and your average rate diverge so sharply in the UK.
One quirk that catches people out every year: the UK tax year does not follow the calendar. It runs from 6 April to 5 April. Rates quoted as "2026/27" apply from 6 April 2026 to 5 April 2027, and a pay rise in March is taxed under a different year's rules than the same rise in May.
The £100,000 trap
Between £100,000 and £125,140 the UK has an effective marginal tax rate of 60% — higher than the 45% top rate that applies above it. Nothing in the published rate table says this, which is why it surprises people.
Here is the mechanism. For every £2 you earn above £100,000, you lose £1 of your Personal Allowance. So on an extra £1 of salary you pay 40p in tax on the pound itself, and 50p of previously tax-free allowance becomes taxable at 40%, costing another 20p. That is 60p of tax on £1 — and with 2% National Insurance on top, a marginal 62%. The allowance is fully gone at £125,140, and from there the marginal rate falls back to 45% plus 2% NI.
The practical consequence is that a bonus taking you from £99,000 to £110,000 is taxed far more heavily than the headline rates suggest, and that pension contributions or salary sacrifice inside that band are unusually effective — each £1 diverted also restores 50p of allowance. Our take-home pay calculator applies the taper automatically, so you can see the band by entering salaries either side of £100,000 and comparing.
Buying property? The tax depends on which nation you buy in
There is no single UK-wide property purchase tax. England and Northern Ireland charge Stamp Duty Land Tax (SDLT), Scotland charges Land and Buildings Transaction Tax (LBTT), and Wales charges Land Transaction Tax (LTT). They are separate taxes with different bands and different thresholds, not regional variations of one tax — the same purchase price can produce three different bills depending on the address. Our stamp duty calculator covers all three, plus the additional-property surcharge and first-time buyer relief.
Passing wealth on
Inheritance Tax has a nil-rate band of £325,000, plus a residence nil-rate band of up to £175,000 where a home passes to direct descendants — and both are transferable between spouses, which is why a married couple is often described as having up to £1m. Above that the rate is 40%, reduced to 36% where at least 10% of the net estate goes to charity. Gifts made more than seven years before death normally fall out of the estate entirely, with taper relief in between. See the inheritance tax calculator and the gifts calculator.
What these calculators cover — and what they don't
Being clear about the edges matters more than adding more numbers:
- Scotland sets its own income tax bands. Our take-home pay calculator uses the rates for England, Wales and Northern Ireland. If you are a Scottish taxpayer, the income tax figure will not match your payslip — the stamp duty calculator, however, does handle Scotland's LBTT.
- Your tax code is assumed to be standard. Marriage Allowance, a company car, underpaid tax collected through your code, or emergency-code months will all move the real figure.
- Pension contributions and salary sacrifice are not deducted unless a calculator offers them as an explicit input — worth remembering given the £100k band above.
- Student loan repayments are handled separately in the student loan calculator, because the plan you are on changes both the threshold and the rate.
Every figure above comes from HMRC and GOV.UK for the 2026/27 tax year. If one looks wrong, please tell us — and see our methodology for how each calculator is checked before it goes live.