Tax Rates 2025/26: What You Need to Know
The 2025/26 tax year in the UK started on 6 April 2025 and runs until 5 April 2026. Understanding the latest tax bands, allowances, and thresholds can help you manage your finances better, whether you’re an employee, self-employed, or retired.
This complete guide explains the key income tax rates, personal allowances, National Insurance thresholds, dividend tax bands, capital gains tax, and other important figures for the current tax year.
What Is the Personal Allowance for 2025/26?
The Personal Allowance is the amount of income you can earn before paying any income tax. For 2025/26, the standard personal allowance remains unchanged:
-
£12,570 per year
This means most people won’t pay income tax on the first £12,570 of their earnings. However, if you earn over £100,000, your personal allowance is reduced by £1 for every £2 above the limit. It is completely removed if your income exceeds £125,140.
Income Tax Bands for 2025/26
The income tax you pay depends on how much you earn above your personal allowance. Below are the income tax bands for England, Wales, and Northern Ireland:
| Income Range (Above Allowance) | Tax Band | Tax Rate |
|---|---|---|
| £0 – £37,700 | Basic Rate | 20% |
| £37,701 – £125,140 | Higher Rate | 40% |
| Over £125,140 | Additional Rate | 45% |
Example:
If you earn £50,000 in total:
-
The first £12,570 is tax-free
-
£37,430 is taxed at 20% = £7,486
-
The remaining £0 is taxed at 40% (since you’re under £50,270 total taxable income)
Scottish Income Tax Bands
Scotland has different tax rates and bands for earned income (e.g. salary, pensions, self-employment). The 2025/26 bands for Scottish taxpayers are:
| Income Range (Above Allowance) | Tax Band | Tax Rate |
|---|---|---|
| £0 – £2,306 | Starter Rate | 19% |
| £2,307 – £13,991 | Basic Rate | 20% |
| £13,992 – £31,092 | Intermediate Rate | 21% |
| £31,093 – £62,430 | Higher Rate | 42% |
| Over £62,430 | Top Rate | 47% |
Note: Scotland uses the same personal allowance of £12,570 as the rest of the UK.
Dividend Tax Rates 2025/26
Dividend income has separate tax bands. All taxpayers get a tax-free dividend allowance of £500 in 2025/26 (reduced from £1,000 in 2023/24 and £2,000 in 2022/23).
After that, the following rates apply based on your total income band:
| Tax Band | Dividend Tax Rate |
|---|---|
| Basic Rate | 8.75% |
| Higher Rate | 33.75% |
| Additional Rate | 39.35% |
National Insurance Rates 2025/26
For employees (Class 1 NICs), the National Insurance system was reformed in recent years. Here are the current 2025/26 NI thresholds:
Employees
| Earnings per Week | NI Rate |
|---|---|
| Up to £242 | 0% (no NI) |
| £242.01 – £967 | 8% |
| Over £967 | 2% |
Employers
| Employee Earnings | Employer NI Rate |
|---|---|
| Over £175/week | 13.8% |
Note: Employers pay NI on wages above £175/week regardless of employee age.
Self-Employed National Insurance
Self-employed individuals pay Class 2 and Class 4 NICs:
-
Class 2: £3.70/week (if profits are above £6,725)
-
Class 4:
-
9% on profits between £12,570 and £50,270
-
2% on profits above £50,270
-
Capital Gains Tax (CGT) 2025/26
Capital Gains Tax applies when you sell certain assets for more than you paid. The annual tax-free allowance for capital gains has been reduced to £3,000 in 2025/26.
CGT Rates:
| Taxpayer Type | CGT Rate (Normal Assets) | CGT Rate (Residential Property) |
|---|---|---|
| Basic Rate | 10% | 18% |
| Higher/Additional Rate | 20% | 24% |
Note: CGT does not apply to your main home (if fully covered by private residence relief), ISAs, or UK gilts.
Inheritance Tax 2025/26
Inheritance Tax (IHT) is charged at 40% on estates above the tax-free threshold, which remains unchanged:
-
Nil-rate band: £325,000
-
Residence nil-rate band (when passing on a main home to direct descendants): £175,000
-
Combined threshold: £500,000 (for individuals), £1 million for couples
Planning with trusts, gifts, and spousal exemptions may reduce your estate’s exposure to IHT.
More info on planning: gov.uk/inheritance-tax
ISA Allowance 2025/26
ISAs let you earn tax-free interest or investment returns. The ISA limit for 2025/26 is:
-
£20,000 per person
-
Can be split across Cash ISA, Stocks & Shares ISA, Lifetime ISA (up to £4,000), or Innovative Finance ISA
For more info on ISAs: gov.uk/individual-savings-accounts
Marriage Allowance
If you earn less than the personal allowance and your spouse is a basic rate taxpayer, you can transfer up to £1,260 of your unused allowance to them, reducing their tax bill by up to £252.
Eligibility details: gov.uk/marriage-allowance
Child Benefit Tax Charge
If either parent earns over £50,000, the High-Income Child Benefit Charge (HICBC) applies. For every £100 above this threshold, you must repay 1% of the benefit—until it’s fully clawed back at £60,000 income.
Even if you don’t claim the cash, registering for Child Benefit helps protect State Pension credits.
Summary Table: Key 2025/26 Tax Limits
| Category | Threshold / Rate |
|---|---|
| Personal Allowance | £12,570 |
| Basic Rate Limit | £37,700 |
| Higher Rate Threshold | £50,270 |
| Additional Rate Threshold | £125,140 |
| Dividend Allowance | £500 |
| CGT Allowance | £3,000 |
| ISA Allowance | £20,000 |
| Class 1 NI Threshold (Weekly) | £242 |
| Class 4 NI Threshold | £12,570 – £50,270 (9%), 2% above |
| Marriage Allowance Transfer | £1,260 |
Final Thoughts
Knowing the 2025/26 tax rates can help you plan your finances better, avoid unexpected tax bills, and take advantage of allowances and reliefs. Whether you’re employed, running a business, or managing investments, staying up to date ensures you’re not paying more than necessary.
For official updates and additional guidance, visit the UK Government’s tax portal.