How to Calculate PAYE Tax in the UK
PAYE (Pay As You Earn) is the system UK employers use to deduct Income Tax and National Insurance from wages before paying them, and hand the money to HMRC. This free calculator uses the official 2026/2027 HMRC rates and thresholds to show your monthly and annual liability.
The first £12,570 you earn is covered by your Personal Allowance and taxed at 0%. Income above that is taxed in bands: £12,571–£50,270 at 20%, £50,271–£125,140 at 40%, above £125,140 at 45%. National Insurance works on a separate set of thresholds — nothing below £12,570 a year, then 8% up to £50,270, and 2% on anything above.
One quirk worth knowing: between £100,000 and £125,140 you lose £1 of Personal Allowance for every £2 you earn. That produces an effective marginal rate of 60%, higher than the 45% additional rate above it. This calculator accounts for that taper.
Frequently Asked Questions
How much tax do I pay on my salary in the UK?
You pay nothing on the first £12,570. Above that, Income Tax applies in bands (£12,571–£50,270 at 20%, £50,271–£125,140 at 40%, above £125,140 at 45%), and National Insurance is charged separately at 8% between £12,570 and £50,270, then 2%.
What are the UK Income Tax bands for 2026/2027?
For England, Wales and Northern Ireland: £12,571–£50,270 at 20%, £50,271–£125,140 at 40%, above £125,140 at 45%. Scotland sets its own: £12,571–£15,397 at 19%, £15,398–£27,491 at 20%, £27,492–£43,662 at 21%, £43,663–£75,000 at 42%, £75,001–£125,140 at 45%, above £125,140 at 48%.
Why is my marginal rate 60% between £100,000 and £125,140?
Because the Personal Allowance is withdrawn by £1 for every £2 earned above £100,000. Each extra £1 of income is taxed at 40% and also exposes 50p of previously tax-free income to 40% tax — an effective 60%.
Do Scottish taxpayers pay different Income Tax?
Yes, on earned income. Scotland has six bands from 19% to 48%, and Scottish tax codes start with S. National Insurance is identical across the UK.
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