UK Take-Home Pay 2026/27: What Changed This Tax Year?

The 2026/27 tax year started on 6 April 2026 with very few headline rate changes — but plenty of fiscal drag, a higher National Living Wage, and unchanged thresholds that quietly push more people into higher bands. Here's what your payslip actually looks like now.

The headline numbers

• Personal allowance: £12,570 — frozen since April 2022 and through April 2028
• Basic rate (20 %) up to £50,270 of taxable income
• Higher rate (40 %) from £50,270 to £125,140
• Additional rate (45 %) above £125,140
• National Insurance: 8 % between £12,570 and £50,270, 2 % above
• National Living Wage (21+): £12.21/hour from April 2026 — about £23,450/year for full-time

Take-home pay by salary level

Numbers exclude student loan, pension, and employee benefits. Add a 5 % auto-enrolment pension to reduce taxable income further and modestly improve your effective tax rate.

The £100,000 trap

One unchanged-but-painful rule: between £100,000 and £125,140 your personal allowance is withdrawn at a rate of £1 for every £2 earned. Combined with 40 % tax and 2 % NI, the marginal rate on that band is 62 %. Salary sacrifice into a pension to stay below £100k remains the single most powerful tax move in the UK system.

Fiscal drag is real

The personal allowance has been frozen at £12,570 since 2022. Wage growth in that period has averaged ~5 % per year. The combined effect: roughly 4 million more people are paying income tax in 2026 than in 2022, and 1.7 million more are in the higher-rate band. None of those people received a "tax rise" — but their effective tax rate climbed every year.

Student loans

Repayment thresholds for 2026/27:

• Plan 1 (pre-2012 England/Wales, NI): £26,900
• Plan 2 (post-2012 England/Wales): £29,385
• Plan 4 (Scotland): £33,795
• Plan 5 (post-2023 England): £25,000
• Postgraduate loan: £21,000 (6 %)

Plan 5 graduates earning £35,000 are paying ~£600/year more than Plan 2 graduates on the same salary, due to the lower threshold.

What's actually new for 2026/27

1. NLW up 6.7 % to £12.21/hr — for the 1.9 million lowest earners, this is the largest change.
2. State pension up 4.1 % under the triple lock — full new state pension now £11,973/year.
3. ISA allowance unchanged at £20,000.
4. Dividend allowance stays at £500 — a third of what it was in 2023.

Scotland: different bands, different take-home

Scottish income tax has its own bands and rates and has diverged sharply from the rest of the UK since 2018/19. For 2026/27 the Scottish bands are:

• Starter rate (19 %) from £12,571 to £15,397
• Basic rate (20 %) from £15,398 to £27,491
• Intermediate rate (21 %) from £27,492 to £43,662
• Higher rate (42 %) from £43,663 to £75,000
• Advanced rate (45 %) from £75,001 to £125,140
• Top rate (48 %) above £125,140

At a £50,000 salary, a Scottish taxpayer pays roughly £1,540 more income tax per year than someone in England with identical earnings. At £100,000 the gap widens to ~£2,750/year.

Pension auto-enrolment: the easy 20 % win

Workplace pension contributions remain pre-tax (relief at source for basic-rate, salary sacrifice for higher-rate where offered). The minimum employer contribution is still 3 % and minimum employee contribution 5 % (with tax relief making the gross 5 % cost only 4 % of net pay for a basic-rate taxpayer).

If your employer offers salary sacrifice and you are above £50,270, every £1,000 contributed via salary sacrifice saves you £420 in tax and £20 in NI — an effective return of 44 % before the pension itself even grows. For workers in the £100,000-£125,140 trap, salary sacrifice is the only way to legally avoid the 62 % marginal rate.

Marriage allowance

Often forgotten but worth claiming: if one partner earns under £12,570 and the other is a basic-rate taxpayer, the lower earner can transfer £1,260 of personal allowance to the higher earner, saving £252/year. Backdated claims to 2021/22 can recover up to £1,260 in one go.

Common pitfalls to check on your payslip

• Wrong tax code: 1257L is standard. Anything else (BR, 0T, K-codes) usually means HMRC thinks you have another income source.
• Salary band creep: a £45,000 → £52,000 raise pushes you over the higher-rate threshold for everything above £50,270. You still keep most of it — but your effective rate jumps.
• Childcare costs: the £100,000 boundary also wipes out tax-free childcare. Salary sacrifice into pension is the standard fix.
• Workplace pension under-contribution: many auto-enrolment defaults take only 5 % of qualifying earnings (above £6,240), not 5 % of full salary. Read the small print of your scheme.
• Benefits in kind: private medical cover, gym membership and company cars are taxable. They appear on the P11D, not the monthly payslip — surprises usually surface in the following year's PAYE code adjustment.