UK tax rates and allowances 2025/26
What you need to know about this year's rates and allowances
Get to know the current tax allowances, rates and thresholds that can help you make the most of your money this year.
Important information: As investment values can go down as well as up, you may not get back all the money you invest. Tax treatment depends on your individual circumstances and may be subject to change in the future. We cannot provide tax or legal advice. If you’re unsure if an investment account is right for you, please speak to an authorised financial adviser.
"Planning your finances effectively can be a great way to reduce your overall tax bill. You’ll need to be aware of all the relevant UK tax rates and allowances.
From income tax bands to capital gains tax and the marriage allowance, find out all the rates and allowances you need to be aware of for the 2025/26 tax year (which started on 6 April) with our round-up."
Victoria Scholar
Head of Investment at interactive investor
What are the personal allowances for 2025/26?
The Personal Allowance is the amount of money you can earn or receive each year before paying income tax. The standard Personal Allowance currently sits at £12,570, but this can be boosted or reduced depending on your level of earnings and personal circumstances.
If you earn less than the Personal Allowance (£12,570), you may be able to transfer £1,260 of your allowance to your spouse or civil partner. This is known as the Marriage Allowance or Transferable Personal Allowance and can save qualifying married couples £252 each year. To be eligible, your partner must pay the basic rate of tax.
If you're registered blind, your personal allowance will be boosted by the Blind Person’s Allowance. You can also pass this additional allowance over to your spouse or civil partner if the allowance exceeds your level of income.
| Allowance | 2024/25 | 2025/26 |
|---|---|---|
| Personal Allowance | £12,570 | £12,570 |
| Blind Person's Allowance | £3,070 | £3,130 |
| Marriage Allowance | £1,260 | £1,260 |
What is the Married Couple's Allowance?
If you or your spouse were born before 6 April 1935, you may be eligible for the Married Couple’s Allowance. This reduces your income tax payments by 10% of the allowance, equating to a reduction in your tax bill of between £436 and £1,127 a year.
If you are a higher earner, you may not qualify for the full allowance. More information on this type of allowance and how to claim it can be found on the Government's Married Couple's Allowance page.
What are the UK income tax rates for 2025/26?
Income tax applies to your work-related earnings and any income from pensions, rental properties, savings and some state benefits. If you earn more than £1,000 a year from a side hustle, that could be subject to income tax too.
The amount of tax you pay is calculated based on your total income over the year. But you only pay your highest rate of income tax (known as your marginal rate) on the amount you earn over the relevant threshold, not on your total income. Thresholds and rates of income tax are the same across England, Wales and Northern Ireland but differ in Scotland.
If you’re employed, income tax will be deducted from your salary via Pay as You Earn (PAYE). However, if you are self-employed or have other sources of income that aren’t taxed, you’ll need to complete a Self-Assessment tax return.
England, Wales and Northern Ireland income tax rates for 2025/26
These UK tax thresholds have been frozen until the April 2028.
| Income tax band | Taxable income | Tax rate |
|---|---|---|
| Personal allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 - £50,270 | 20% |
| Higher rate | £50,271 - £125,140 | 40% |
| Additional or top rate | Over £125,140 | 45% |
Scotland income tax rates for 2025/26
Different income tax rates and bands apply in Scotland.
| Income tax band | Taxable income | Scottish tax rate |
|---|---|---|
| Personal allowance | Up to £12,570 | 0% |
| Starter | £12,571 - £14,876 | 19% |
| Basic | £14,877 - £26,561 | 20% |
| Intermediate | £26,562 - £43,662 | 21% |
| Higher | £43,663 - £75,000 | 42% |
| Advanced | £75,001 - £125,140 | 45% |
| Top | Over £125,140 | 48% |
National Insurance contributions rates
If you earn an income from employment or self-employment you’ll need to pay National Insurance contributions. These payments will help build your entitlement to certain benefits including the state pension and maternity benefits.
| Type of National Insurance contribution | Rates for 2025/26 |
|---|---|
| Class 1 (Employees) | Charged at 8% on earnings between £242 and £967 a week. Earnings above £967 a week are charged at 2%. |
| Class 2 (Self-employed) | Charged at £3.45 a week once earnings are over £6,725 a year. Class 2 NICs became voluntary from April 2024. |
| Class 3 (Voluntary) | These cost £17.45 a week. |
| Class 4 (Higher-earning self-employed) | Charged at 6% on profits between £12,570 and £50,270 (assuming 2024/25 rates). Profits above this level are charged at 2%. |
Wealth and investment taxes
In addition to tax on your income, you may also need to pay tax on your investments and other assets. The two main taxes you'll pay are Capital Gains Tax (CGT) and Dividend Tax.
Investments held in ISAs or pensions won’t be subject to CGT or Dividend Tax. Profits or income from other assets should be reported to HMRC directly through your Self-Assessment tax return.
Capital Gains Tax
When you sell or dispose of an asset that has gone up in value during the time you owned it, you may have to pay tax on your gains. This can include investments like shares and funds, as well as high-value items like artwork and jewellery. It includes property too, but your main home is exempt.
Each year, you have a Capital Gains Tax allowance within which, you won't have to pay any tax on your profits. This is known officially as the annual exempt amount and is currently £3,000.
Capital Gains Tax rates for 2025/26
| Income tax band | Capital Gains Tax rate |
| Basic rate | 18% |
| Higher rate | 24% |
Dividend Tax
Dividend Tax is a tax charged on income you earn from shares. This could include direct shares you hold or collective investments, like funds, that invest in shares. The amount you pay depends on the rate of income tax that you pay.
However, you can earn some dividend income before tax is charged. Dividend income can be included in your Personal Allowance and, once that has been reached, there is also a dividend allowance. In 2025/26 the dividend allowance is £500 (down from £1,000 in 2023/24).
Dividend Tax rates
| Income tax band | Dividend Tax rate (2025/26 tax year) | Dividend Tax rate (2026/27 tax year) |
| Basic rate | 8.75% | 10.75% |
| Higher rate | 33.75% | 35.75% |
| Additional rate | 39.35% | 41.35% |
Savings and investment allowances for 2025/26
It is possible to shelter a certain amount of your savings and investments from tax each year using ISAs and pensions. However, tax benefits will be limited by an annual allowance each year.
Savings and investment allowances
ISA: £20,000
Junior ISA: £9,000
Child trust fund (CTF): The CTF scheme closed in 2011, but anyone with an account still running can pay in up to £9,000.
Pensions: You can save 100% of your earnings up to a limit of £60,000 into any number of pensions each year. This annual allowance includes personal contributions, employer contributions and tax relief.
What about Inheritance Tax?
Another wealth tax you may come across is Inheritance Tax (IHT). This is currently a 40% tax charged when an individual dies and leaves an estate that is worth more than the IHT allowance.
Everyone has an IHT allowance of £325,000 which can be boosted by a further £175,000 if a family home is being passed on to children or grandchildren. Importantly, your allowance can be passed on to a spouse or civil partner when you die. This means a couple passing on their home can leave an estate worth £1m before any IHT will be payable.
Inheritance Tax is a highly complicated subject. That's why many people choose to seek professional advice in this area, to help them make informed and tax-efficient decisions.
Make this your best (tax) year yet
Each year, you have an allowance you can use to maximise the tax efficiency of your savings.
Take a look at our ideas on how you can use your allowances to your advantage.
