Higher rate tax: when you start paying 40%

In England, Wales and Northern Ireland you start paying 40 per cent income tax on income above £50,270 in the 2026/27 tax year. That figure is the £12,570 Personal Allowance plus the £37,700 basic rate band. Only the part of your income above £50,270 is taxed at 40 per cent, and the rate stays there up to £125,140. Scotland has its own bands, and its 42 per cent higher rate starts much lower, at £43,663.

The bands for 2026/27

Band	Taxable income (gross)	Rate
Personal Allowance	up to £12,570	0%
Basic rate	£12,571 to £50,270	20%
Higher rate	£50,271 to £125,140	40%
Additional rate	over £125,140	45%

These are the rates for non-savings income such as salary and pension. Wales sets its own rates, but for 2026/27 the Welsh Government kept them in line with England, so a Welsh taxpayer on a C code pays the same totals. The figures assume the standard allowance. If your tax code is not 1257L, your own starting point for 40 per cent moves up or down with it.

The threshold, the basic rate limit and the Personal Allowance are all frozen until 5 April 2031. Pay awards keep rising while the line stays put, so each year more public sector staff cross it. The guide to how income tax works covers the full calculation.

Only the extra pounds pay 40 per cent

Higher rate tax is a marginal rate. Say you are a band 7 nurse in England at the top of the band, £56,515 for 2026/27, with no other income and a 1257L code. Ignoring pension contributions for the moment, the tax works out like this:

• the first £12,570 is tax-free
• the next £37,700 is taxed at 20 per cent, which is £7,540
• the remaining £6,245 is taxed at 40 per cent, which is £2,498.

That is £10,038 in income tax, and only £6,245 of the salary was taxed at the higher rate.

National Insurance drops as tax rises

Employee National Insurance (category A) is 8 per cent on earnings between £12,570 and £50,270 and 2 per cent above that. The upper earnings limit is set at the same £50,270 as the higher rate threshold. So once you cross it, each extra pound of salary loses 40p in tax and 2p in NI, a combined 42p, compared with 28p below the line.

If you repay a student loan, that comes on top. Plan 2 takes 9 per cent of earnings above £29,385, so a higher rate taxpayer with a Plan 2 loan loses 51p of each extra pound. How much of a pay rise do you actually keep? works through examples, and the take-home pay calculator shows the monthly figures for your salary.

Scotland: 42 per cent from £43,663

Scottish taxpayers (S tax codes) have six bands. The higher rate is 42 per cent and starts at £43,663, then the advanced rate of 45 per cent applies from £75,001.

Scottish band	Gross income	Rate
Intermediate	£29,527 to £43,662	21%
Higher	£43,663 to £75,000	42%
Advanced	£75,001 to £125,140	45%

Because Scottish income tax does not change National Insurance, the NI upper earnings limit is still £50,270. Between £43,663 and £50,270 a Scottish taxpayer pays 42 per cent tax and 8 per cent NI, a marginal rate of 50 per cent before any student loan. Gov.scot says the higher, advanced and top thresholds stay frozen until 2028-29. Savings and dividend income use the UK bands, not the Scottish ones. See Scottish S tax codes and rates.

What changes once you are a higher rate taxpayer

A few other rules depend on your band:

• your Personal Savings Allowance falls from £1,000 to £500 of interest a year
• dividends above the £500 allowance are taxed at 35.75 per cent instead of 10.75 per cent
• you cannot receive Marriage Allowance from a partner, because the recipient must be a basic rate taxpayer (or, in Scotland, starter, basic or intermediate)
• if your adjusted net income goes above £60,000 and someone in your household gets Child Benefit, the High Income Child Benefit Charge starts.

If you have a second job, HMRC may give it a D0 code so that all pay from it is taxed at 40 per cent. D0 and D1 tax codes explains when that happens.

How pension contributions move the line

The public sector schemes (NHS, Teachers’, LGPS and Civil Service alpha) take member contributions through a net pay arrangement. That means the contribution comes off your pay before tax is worked out. Say you earn £53,000 in England and pay into the NHS Pension Scheme at 10.7 per cent. That is £5,671 a year, which brings taxable pay down to £47,329, below the higher rate threshold, even though the salary is above it.

Contributions to a personal pension paid through relief at source work differently, and higher rate relief on those has to be claimed from HMRC. Pension tax relief: net pay vs relief at source sets out the two systems. Salary sacrifice and payroll giving also cut taxable pay. Whether any of this suits you is a personal decision; HMRC or a regulated adviser can help with your own position.

Checking whether you pay it

Your payslip shows tax deducted each month, and your P60 shows taxable pay for the whole year. If taxable pay on the P60 is above £50,270 (or £43,662 in Scotland), some of it was taxed at the higher rate. Your HMRC personal tax account shows the estimated income HMRC is using for your code. Checking that estimate is the easiest way to catch a mistake early.