What is the marginal tax rate in the UK?

In the UK for 2025–26, the combined marginal tax rate (income tax + employee NI) for an employee in England, Wales or N.I. is: 0% on income up to £12,570 (personal allowance), 28% on £12,571–£50,270 (20% IT + 8% NI), 42% on £50,271–£100,000 (40% IT + 2% NI), approximately 62% on £100,001–£125,140 (due to the personal allowance taper), and 47% above £125,140 (45% IT + 2% NI).

Why is the marginal tax rate 60% above £100,000?

Above £100,000, the £12,570 personal allowance is withdrawn at a rate of £1 for every £2 earned. This means income in the £100,000–£125,140 range is taxed twice: once at the 40% higher rate on the income itself, and again at 40% on the equivalent income that was previously shielded by the allowance. The combined effective income tax rate in this band is 60% (40% + 20%), plus 2% NI, giving a combined marginal rate of approximately 62%.

What is the marginal tax rate for a basic rate taxpayer?

A basic rate taxpayer (income between £12,570 and £50,270 in 2025–26) faces a combined marginal rate of 28%: 20% income tax plus 8% employee National Insurance on each extra pound earned.

What is the marginal tax rate for a higher rate taxpayer?

A higher rate taxpayer (income between £50,270 and £100,000 in 2025–26) faces a combined marginal rate of 42%: 40% income tax plus 2% employee National Insurance on each extra pound earned. NI drops to 2% above £50,270 (the upper earnings limit).

Marginal Tax Rate UK | Income Tax, NI & Allowance Taper

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Not financial or tax advice. Thresholds and rates change by tax year. Use HMRC or a qualified accountant for your situation.

Definition

Your marginal tax rate is the combined effect on the next pound you earn. In the UK that is usually discussed as income tax plus employee National Insurance on earned income, though strictly other rules can apply at specific income levels.

Income tax bands

Above the personal allowance, income tax is charged in bands (basic, higher, additional in England, Wales, and Northern Ireland). Each band has its own percentage. So your marginal income tax rate jumps when you cross a threshold. Scotland uses a different set of bands, so the marginal schedule differs.

National Insurance

Class 1 employee NI has its own thresholds. There is often a lower rate (or zero) below the primary threshold, a main rate on a middle slice of earnings, and sometimes a lower rate above the upper earnings limit. That means your combined marginal rate on salary is not a single flat percentage—it is the sum of the marginal income tax and marginal NI at your current earnings point.

The personal allowance taper

For incomes above £100,000, the personal allowance is withdrawn gradually. In that range, you can face a very high effective marginal rate on each extra pound, because you lose allowance as well as paying tax on the income itself. Our calculator models allowance taper for the selected year so you can see the pattern in outputs, not just in theory.

Marginal vs effective

Do not confuse marginal rate with effective (average) tax rate. The average is always lower than the top marginal slice unless you have almost no allowance left. Both views help: marginal for “what happens if I earn more?”, effective for “what share did I pay overall?”

Combined marginal rates — 2025–26 (England, Wales & N.I.)

The table below shows the combined marginal rate (income tax plus employee National Insurance) at each income band for 2025–26. Scotland has different income tax bands — see the Scottish income tax guide for Scottish marginal rates.

Combined marginal tax rate (IT + employee NI) by income band — 2025–26
Gross income band	Marginal IT rate	Marginal NI rate	Combined marginal rate
£0 – £12,570	0%	0%	0%
£12,571 – £50,270	20%	8%	28%
£50,271 – £100,000	40%	2%	42%
£100,001 – £125,140	60%*	2%	~62%*
Above £125,140	45%	2%	47%

*The 60% effective income tax rate in the £100,001–£125,140 band arises because the £12,570 personal allowance is withdrawn at £1 for every £2 earned above £100,000 — effectively creating an extra 20% rate on top of the 40% higher rate. Source: HMRC 2025–26.

The £100,000 trap in detail

At exactly £100,000 of income, the personal allowance taper begins. For every extra £2 earned, £1 of the £12,570 personal allowance is lost. That lost allowance — which would have been tax-free — is now taxed at 40%. So on each additional pound earned in this band, you pay 40% on that pound plus the equivalent of 20% on the lost allowance: a combined 60% effective income tax rate, plus 2% NI. Salary sacrifice contributions can bring income back below £100,000 and escape this zone entirely.

Common questions

What is the marginal tax rate for someone earning £35,000?

At £35,000 the entire salary (above the personal allowance) is in the basic rate band. The combined marginal rate on the next pound earned is 28%: 20% income tax plus 8% employee National Insurance. This remains 28% until income reaches £50,270.

What is the marginal tax rate for someone earning £60,000?

At £60,000, earnings are in the higher rate band. The combined marginal rate on the next pound earned is 42%: 40% income tax plus 2% National Insurance. NI falls to 2% above the upper earnings limit (£50,270).

What marginal rate applies between £100,000 and £125,140?

The effective combined marginal rate is approximately 62% in this zone: 60% effective income tax (40% on the income plus 40% on the equivalent lost personal allowance, equating to an extra 20%) plus 2% NI. This is often called the “60% tax trap”. Pension salary sacrifice is the most common way to reduce income below £100,000 and avoid it.