Understanding UK Personal Tax Rates (2025/26)

Navigating personal tax in the UK is essential for individuals managing their income, savings, and investments. The tax system is progressive, meaning the more you earn, the higher the percentage of tax you pay.

Income Tax Bands (2025/26):

Personal Allowance: Up to £12,570 – 0% tax
Basic Rate: £12,571 to £50,270 – 20%
Higher Rate: £50,271 to £125,140 – 40%
Additional Rate: Above £125,140 – 45%

Note: The personal allowance gradually reduces for incomes over £100,000 and is completely removed once income exceeds £125,140.

Dividend Income:

£500 allowance (2025/26)
Basic rate taxpayers: 8.75%
Higher rate: 33.75%
Additional rate: 39.35%

Savings Income:

Basic rate taxpayers may receive up to £1,000 in savings interest tax-free (called the Personal Savings Allowance). This drops to £500 for higher rate taxpayers and is zero for additional rate taxpayers.

Understanding how your income is taxed helps with planning and efficiency. For tailored advice on managing your personal tax position, speak to Cora Accounting !