The 2025-26 UK tax year at a glance
The UK tax year runs from 6 April 2025 to 5 April 2026. The headline figures for 2025-26 are:
- Personal Allowance: £12,570 (unchanged for the fifth consecutive year)
- Basic Rate (20%): £12,571 to £50,270
- Higher Rate (40%): £50,271 to £125,140
- Additional Rate (45%): Above £125,140
- NIC Employee Rate: 8% up to £50,270, then 2% above
The personal allowance freeze — how it hits your real pay
The personal allowance has been frozen at £12,570 since 2021-22 and is set to remain there until at least 2028. This is often described as a "stealth tax" — because with inflation, the same nominal threshold represents a smaller proportion of the average salary each year.
The 60% effective marginal rate trap
For earnings between £100,000 and £125,140, your Personal Allowance tapers away: for every £2 earned above £100,000, you lose £1 of your allowance. The result is an effective 60% marginal rate in this band.
This makes pension salary sacrifice extraordinarily valuable for earners in this range. Every £1,000 contributed to a pension saves £600 in tax rather than the standard £200.
Scottish income tax
Scotland has a five-band system with a Starter Rate of 19% and a top Additional Rate of 48% above £125,140. Scottish taxpayers generally pay slightly more tax than equivalent English earners above £27,000.
Key dates for the 2025-26 tax year
- 6 April 2025: New tax year begins
- 31 July 2025: Second payment on account deadline (self-employed)
- 31 January 2026: Self-assessment tax return and payment deadline
- 5 April 2026: Tax year ends — use remaining ISA and pension allowances
Tips to reduce your 2025-26 tax bill legally
1. Maximise pension contributions. Salary sacrifice contributions reduce both income tax and NIC simultaneously.
2. Use your ISA allowance (£20,000). ISA returns are completely tax-free.
3. Claim Marriage Allowance if eligible. Transferring £1,260 of allowance saves up to £252 per year.
4. Check your tax code. A wrong tax code can result in months of over- or under-paying.