Personal Tax Rates
Income Tax Thresholds and Rates for England and Northern Ireland (2025–2026)
Personal Allowance
The Personal Allowance is the amount of income employees can earn tax-free.
- Weekly: £242
- Monthly: £1,048
- Annually: £12,570
Note: For individuals earning more than £100,000, the Personal Allowance is reduced by £1 for every £2 of income above this threshold. For those earning over £125,140, the Personal Allowance is completely removed.
Income Tax Rates
- Basic Rate (20%):
- Applies to annual earnings between £12,571 and £50,270.
- Higher Rate (40%):
- Applies to annual earnings between £50,271 and £125,140.
- Additional Rate (45%):
- Applies to annual earnings exceeding £125,140.
Key Notes for Employers
- The amount of Income Tax deducted from employees depends on their tax code and taxable income above the Personal Allowance.
- Employers must ensure their payroll software is updated to reflect the latest tax thresholds and rates.
Why Accurate PAYE Management Matters
- Avoid Penalties: Incorrect deductions can result in fines from HMRC.
- Employee Trust: Accurate payroll processing builds employee confidence.
- Compliance: Staying up-to-date with HMRC rules ensures smooth operations.
Stay Informed for 2025
The 2025–2026 tax year thresholds and rates are subject to periodic reviews by HMRC. Always verify changes during the Chancellor’s Budget announcements or by visiting the official HMRC website.