60%
Effective marginal tax rate between £100,000 and £125,140
15m
UK adults subscribed to an ISA, but most hold the wrong kind
Average ISA pot gap between men and women, £6.6bn nationwide
£12,570
Personal Allowance, frozen until 2031, pulling more earners into higher bands via fiscal drag
The income tax structure is unchanged from the previous year. The personal allowance remains frozen at £12,570 and the higher-rate threshold at £50,270 until April 2031, after the freeze was extended by three years at the Autumn Budget 2025. This is fiscal drag: as wages rise with inflation, more people get pulled into higher bands without any change to the bands themselves.
| Band | Taxable Income | Rate | Tax on Band |
|---|---|---|---|
| Personal Allowance | £0 – £12,570 | 0% | £0 |
| Basic Rate | £12,571 – £50,270 | 20% | up to £7,540 |
| Higher Rate | £50,271 – £125,140 | 40% | up to £29,948 |
| Additional Rate | Over £125,140 | 45% | marginal |
Source: HMRC, Rates and allowances: Income Tax (GOV.UK), 2026/27
| Band | Taxable Income | Rate |
|---|---|---|
| Starter | £12,571 – £16,537 | 19% |
| Basic | £16,538 – £29,526 | 20% |
| Intermediate | £29,527 – £43,662 | 21% |
| Higher | £43,663 – £75,000 | 42% |
| Advanced | £75,001 – £125,140 | 45% |
| Top | Over £125,140 | 48% |
Source: Scottish Government, Income tax rates and bands 2026 to 2027, 2026/27
Bands assume the individual receives the standard UK Personal Allowance (£12,570).
Around 1.8 million UK taxpayers earn above £100,000 (a fast-growing group thanks to frozen thresholds), but those who do face one of the most punishing "invisible" tax traps in the developed world. The personal allowance reduces by £1 for every £2 of additional income above £100,000, creating a 60% effective marginal tax rate on income between £100,000 and £125,140.
60%
The highest combined marginal rate in the UK personal tax system. Applies to the £25,140 of income between £100,000 and £125,140.
Source: GOV.UK, Personal Allowances: adjusted net income, 2026/27
£25,140
The personal allowance tapers from full (£12,570) at £100,000 to zero at £125,140. Above £125,140, no personal allowance remains.
Source: GOV.UK, Income Tax rates and Personal Allowances, 2026/27
1.8m
HMRC estimates 1.8 million taxpayers earned above £100,000 in 2024/25, projected to reach 2.29 million by 2028/29 as frozen thresholds pull in more earners. Most do not realise the taper exists until their tax code is amended mid-year.
Source: HMRC data via Rathbones FOI request, Nov 2025, 2024/25
Step 1: Calculate the taper
Step 2: Recalculate tax
Without the taper, the same earner would pay £35,432 in income tax. The taper adds £4,000, an effective additional 20% on the £20,000 above £100,000, on top of the headline 40% higher rate. The marginal rate on income in the taper zone is 60%.
The taper triggers on adjusted net income, not salary alone. Rental income, investment gains, dividends, and pension income all count. Someone with a £95,000 salary and £15,000 of rental income is hit by the same taper as a £110,000 earner, often without realising until their tax code changes.
A pension contribution that drops taxable income back below £100,000 restores the full personal allowance. For an earner at £120,000, a £20,000 gross pension contributionremoves them from the taper zone. The effective "return" on that contribution is the 60% marginal tax saved, the highest guaranteed return available to higher earners.
National Insurance is a separate tax on employment income, paid on top of income tax. The 2026/27 thresholds are slightly different from the income tax personal allowance, which is why the marginal rate on a £50,000 salary depends on which side of each threshold the earner sits.
| Threshold | Weekly | Monthly | Annual |
|---|---|---|---|
| Lower Earnings Limit | £129 | £559 | £6,708 |
| Primary Threshold | £242 | £1,048 | £12,570 |
| Upper Earnings Limit | £967 | £4,189 | £50,270 |
| Employer rate (above secondary threshold) | 15% on earnings above £96/week | ||
Source: GOV.UK, Rates and thresholds for employers 2026 to 2027, 2026/27
Class 1 employee (Category A) standard rates. The 2% rate above the UEL is the lowest in the developed world for high earners.
| Component | Rate | Amount |
|---|---|---|
| Gross salary | n/a | £45,000 |
| Less: Personal Allowance | n/a | −£12,570 |
| Taxable income | n/a | £32,430 |
| Income tax (basic rate) | 20% | £6,486 |
| Employee NI (£12,570 – £45,000) | 8% | £2,594 |
| Total tax + NI | n/a | £9,080 |
| Take-home pay | n/a | £35,920 |
Source: Delphina worked example using HMRC 2026/27 rates. Excludes Scottish income tax, student loan repayments, pension auto-enrolment, and salary sacrifice arrangements.
“Between £100,000 and £125,140, every extra pound you earn is taxed at an effective 60% rate, the highest in the UK system. The taper is invisible until your tax code arrives.”
Delphina, UK Personal Taxes 2026/27 Statistics
July 2026 to August 2026. Tax year covered: 2026/27 (6 April 2026 to 5 April 2027).
All figures are drawn from authoritative UK public sources, listed by claim:
Delphina does not sell financial products and does not receive commission for ISA, pension, or investment recommendations. The figures on this page are presented for educational and journalistic use. Worked examples illustrate the 2026/27 tax mechanics; they are not personal financial advice.
UK Personal Taxes 2026/27. Delphina. www.delphina.money/stats/uk-personal-taxes
UK Personal Taxes 2026/27. Delphina. www.delphina.money/stats/uk-personal-taxes
Sources: GOV.UK Income Tax rates and Personal Allowances; GOV.UK Rates and thresholds for employers 2026 to 2027; Scottish Government Income Tax rates and bands 2026 to 2027; HMRC Annual Savings Statistics 2025; HM Treasury (unclaimed Child Trust Funds); FCA Financial Lives 2024; AJ Bell; Moneyfacts-compiled ISA return data; HMRC data via Rathbones FOI request.