How UK income tax and National Insurance work together

Two schedules run on every UK salary and they do not run on the same base. Income tax applies to what is left after the personal allowance. National Insurance applies to gross earnings from its own threshold. Nearly every mistake in UK take-home arithmetic comes from treating the second as a rate on the first.

Two schedules, two bases

Income tax is charged in bands on taxable income, which is your salary less the personal allowance. National Insurance is charged in its own bands on gross pay, with a threshold that starts a few pounds higher and an upper limit above which the rate falls rather than rises. The two never share a base and never share a boundary.

The consequence is that the marginal rate at any salary is the sum of two schedules, not one. In the basic band it is 28%, not 20%. In the higher band it is 42%, not 40%. Above the upper earnings limit National Insurance falls to 2%, so the combined marginal rate can drop while income tax alone never does. On a £60,000 salary this year the deduction is £11,432 of income tax and £3,210 of National Insurance, an effective rate of 24.4%against a marginal rate of 42.0%.

Bands apply to the income inside them, never to the whole

Someone described as a higher-rate taxpayer almost never pays 40% of their pay. Each rate applies only to the part of income that sits inside its band, so crossing into a higher band taxes the pound that crossed and leaves everything below it untouched. That is why the effective rate on every salary page here is lower than the top band that salary reaches, and why turning down a rise to avoid a band is never the right call.

The allowance taper, and the rate that is not published

Above £100,000 the personal allowance is withdrawn by 50p for every £1 of income. The extra pound is taxed at the higher rate, and it also strips 50p of allowance that had been tax free, which is then taxed at the higher rate as well. The result is 60% on income tax alone, or 62% with National Insurance, and it persists until the allowance reaches zero at £125,140. That is precisely where the additional rate begins, which is not a coincidence: the taper is written to finish there.

No table of rates names 62%, because it is not a rate. It is two rules interacting, each published separately, and it is the reason a pension contribution or salary sacrifice inside that band is worth far more than the same money taken as pay. Every salary page on this site that sits in the region says so on the page itself rather than leaving the reader to derive it.

The marginal rate, at every point it changes

This is the whole UK schedule in one table: what is taken from the next £100 at each salary, and what the salary is actually paying across the whole of itself. Read the last column downwards and the system's one genuine oddity appears, a marginal rate that rises to 62% and then falls.

Effective and marginal rates across the UK income range, 2026 to 2027
Gross salary	Take-home	Effective rate	On the next £100
£10,000	£10,000	0.0%	0.0%
£12,570	£12,570	0.0%	26.9%
£15,000	£14,321	4.5%	28.0%
£30,000	£25,121	16.3%	28.0%
£50,270	£39,715	21.0%	42.8%
£60,000	£45,358	24.4%	42.0%
£80,000	£56,958	28.8%	42.0%
£100,000	£68,558	31.4%	62.0%
£110,000	£72,358	34.2%	62.0%
£125,140	£78,111	37.6%	47.0%
£150,000	£91,287	39.1%	47.0%
£200,000	£117,787	41.1%	47.0%

Three things in that table surprise people. The basic-rate marginal is 28% rather than 20%, because National Insurance is charged on the same pound. The rate at £110,000 is higher than the rate at £200,000, which is the allowance taper doing something no rate card describes. And the effective rate never reaches the top band: even at £200,000, well into the additional rate, what is actually paid across the whole salary is far below 45%, because every pound below that band was taxed on the way up at its own rate.

The practical use of the last column is deciding what to do with money at the margin. In the 62% band a pension contribution or a salary sacrifice is worth more than double what the same amount is worth as pay after tax. At 28% the calculation is quite different. Nobody can make that decision from a list of band rates, which is why every salary page on this site states its own marginal rate rather than naming a band.

What the calculators here assume

England, Wales and Northern Ireland. Scottish income tax rates are not applied.
National Insurance category A, the standard employee letter, on a single employment.
No pension contribution, salary sacrifice, student loan repayment, marriage allowance or benefit in kind.
Employer National Insurance excluded, because it never appears in your gross pay.
Annual figures. A payslip differs from one twelfth because PAYE recalculates cumulatively each period.

Where the two schedules start, and why they differ

HMRC publishes income tax thresholds annually and National Insurance thresholds weekly. The personal allowance is an annual figure; the primary threshold is a weekly one. Annualising the weekly figure at fifty-two weeks does not land on the annual figure, so the two schedules begin a few pounds apart, and the gap is arithmetic rather than policy. This site annualises at fifty-two weeks and says so on every page rather than quietly aligning them, because a reader who checks against a payslip should be able to see which convention produced the number.

The upper earnings limit is where National Insurance stops behaving like income tax. Above it the employee rate falls rather than rises, and it happens to sit at the same salary as the higher-rate income tax threshold. So at that point one schedule steps up and the other steps down on the same pound, which is why the combined marginal rate moves from 28% to 42% rather than to the 48% a naive addition would give.

None of this is exotic and all of it is public. It goes wrong so often because it requires holding two schedules with different bases and different boundaries in mind at once, and because almost every summary of UK tax describes only the first of them. A page that quotes 20%, 40% and 45% has described less than half of what comes out of a payslip.

What a payslip does that an annual figure cannot

PAYE operates cumulatively. Each pay period you are given the year's allowance and bands in proportion, and the tax is recalculated against everything earned so far rather than against that period alone. On a steady salary the result is twelve identical months and the annual figures on these pages are exactly right.

It stops being identical the moment anything changes. A bonus in one month is annualised by the code before the bands are applied, which is why a bonus often looks over-taxed on the payslip and corrects itself later in the year. A mid-year pay rise pulls the earlier months into the new calculation. A change of job with a late P45 can produce an emergency code that ignores the year to date entirely. All three resolve by the end of the year, and none of them changes the annual total this site computes.

The reason to know this is that a payslip disagreeing with an annual calculation is usually the payslip catching up rather than the calculation being wrong. If the disagreement persists to the end of the tax year, that is the point at which it is worth investigating rather than the first month it appears.

Questions about the UK system

Why is the marginal rate 28% and not 20% in the basic band?

Because two schedules apply to the same pound. Income tax takes 20% of it and employee National Insurance takes 8%, so 28% of the next £100 is gone. Quoting the band rate alone understates what a rise is worth by more than a quarter, and it is the single most common way UK take-home is misdescribed.

What is the 60% tax trap?

Above £100,000 the personal allowance is withdrawn by 50p for every £1 earned. The extra pound is taxed at the higher rate, and it also exposes 50p of allowance that used to be tax free, which is taxed at the higher rate too. That is 60% on income tax alone, or 62% once National Insurance is counted. It is not a published rate: it is two published rules interacting, which is why no rate table names it.

Why do the income tax and National Insurance thresholds differ by a few pounds?

HMRC publishes National Insurance thresholds weekly and income tax thresholds annually. Annualising £242 a week at 52 weeks gives £12,584, while the income tax personal allowance is £12,570. The £14 gap is arithmetic rather than policy, and this site annualises at 52 weeks and says so rather than quietly aligning the two.

Does the higher rate apply to my whole salary once I reach it?

No, and this is the misunderstanding that makes people turn down pay rises. Each rate applies only to the income inside its own band. Crossing into the higher rate taxes the pound that crossed at 40%, and leaves every pound below it exactly where it was. Your effective rate, which is what you actually pay across the whole salary, is always lower than your top band.

Why does the marginal rate fall as income rises above £125,140?

Two reasons stack there. The allowance withdrawal finishes once the allowance reaches zero, which happens at exactly £125,140, and employee National Insurance has already dropped to 2% above the upper earnings limit. So the rate on the next pound falls from 62% to 47%. A tax system where the marginal rate falls as income rises is unusual and this is where the UK does it.

Are these figures Scotland too?

No. Scotland sets its own income tax bands and rates. Every UK figure on this site is England, Wales and Northern Ireland, stated on each page rather than averaged into a number that would be wrong in both places. National Insurance is UK-wide and does not change across the border.

How this figure is produced, and how it is checked

Nothing on this page is typed in. Every rate, threshold and allowance is a rule in a store, and each rule carries the document it came from, the date it was read, an exact quote and a hash of that quote as it stood on the day. The calculation reads rules through a lens that records every one it touches, so the citations underneath a number are derived from the arithmetic that produced it. A page cannot cite a source the calculation did not use, and cannot use one it does not show.

A missing rule is a build failure rather than a fallback. That sounds severe until you consider the alternative: the failure worth preventing here is not a wrong number, it is a plausible one. A calculator that quietly substitutes last year's allowance produces a figure no reader can tell apart from the right one, and every check that matters is designed around making that impossible rather than unlikely.

Four gates run before anything is published. Golden fixtures check the arithmetic against worked examples at several incomes. An independent second reader compares every rule against a separately published compilation of the same law and records each disagreement rather than resolving it silently. A reconciliation gate computes tax for a single person at 67%, 100% and 167% of the average wage and requires the result to reproduce the average rates the OECD publishes for exactly that person. And a page gate checks that what is rendered matches what was computed, because a template can drift from the engine behind it without either being wrong on its own.

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Terms used on this page

Gross salary: Your pay before any deduction. Every rate on this site is expressed against gross, so a rate of 20% means a fifth of what you are paid rather than a fifth of some smaller base.
Taxable income: What the tax ladder actually runs on: gross, less any allowance, less any contribution that reduces the base. It is usually a smaller number than your salary, which is why a top rate of 45% never means 45% of your pay.
Effective rate: Everything taken, divided by gross. It is always lower than the highest band you reach, because the income below that band is taxed at the lower rates on the way up. This is the number to use when comparing two offers.
Marginal rate: What is taken from the next unit you earn. It decides whether a rise, a bonus or an extra shift is worth taking, and it can be far higher than your effective rate. It is measured here by computing the tax twice and taking the difference, never by reading a band off a table.
Allowance: An amount of income outside the tax ladder. Some jurisdictions publish one; others express the same idea as a first band taxed at zero per cent, which produces the same answer by a different route.
Tax credit: An amount taken off the tax itself rather than off the income. A non-refundable credit can reduce tax to zero but not below it, so it is worth less to somebody who owes little than the headline suggests.
Employee social security: Compulsory contributions taken from your pay and distinct from income tax, usually charged on gross with thresholds of their own. Employer contributions are excluded everywhere on this site, because they never appear in your gross pay and including them would flatter or damn a country depending on where its wedge sits.
Tax year: The period a schedule applies to. It is not the year you file in. The two are routinely conflated by pages that rank well for these terms, which is why every rule here carries its tax year as a first-class field.

Put it against a number

272 UK salaries have their own page showing the bands that salary crosses, what the next threshold costs and what a rise actually leaves. The United Kingdom calculator takes any figure.