A lot of people still search for UK tax rates from 2023-24, which tells us two things: the question is evergreen, and the figures from a few years ago are genuinely out of date. If you have landed here looking for current rates, you are in the right place. We cover the 2026/27 position throughout this article.

The headline numbers for income tax bands and personal allowances have been frozen since 2021, and they remain frozen at the same levels for 2026/27. That sounds like stability, but in practice the freeze is pulling more people into higher tax bands every year as wages rise. If your income has grown since 2023-24, the bands you sat in then may not be the bands you sit in now, even though the thresholds have not moved.

Below we run through the current rates, the allowances that can reduce your bill, the situations where things get more complicated, and what has changed in the compliance landscape since Making Tax Digital for Income Tax went live in April 2026.

The personal allowance remains £12,570 for 2026/27. This is the amount of income you can earn before any income tax is due. It has been frozen at this level since April 2021 and is currently legislated to stay frozen until at least April 2028.

Above the personal allowance, the rates for 2026/27 are:

• Basic rate (20%): taxable income from £1 to £37,700 (which means total income from £12,571 to £50,270)
• Higher rate (40%): taxable income from £37,701 to £112,570 (total income from £50,271 to £125,140)
• Additional rate (45%): taxable income above £112,571 (total income above £125,140)

These thresholds are unchanged from 2025/26. If you are a sole trader or freelancer whose turnover has risen over the past two or three years, it is worth checking which band you now sit in. The freeze means the bands are effectively narrowing in real terms every year, and crossing into the higher-rate band at £50,271 has significant consequences for how much tax you owe and when.

For Scottish taxpayers, different rates and bands apply. The Scottish Government sets its own income tax rates on non-savings, non-dividend income, so if you are tax-resident in Scotland, you should check the rates published by Revenue Scotland separately.

If your total income exceeds £100,000, your personal allowance starts to reduce. For every £2 of income over £100,000, you lose £1 of personal allowance. By the time total income reaches £125,140, the personal allowance has gone entirely.

This creates an effective marginal tax rate of 60% on income between £100,000 and £125,140. That is not a typo. You pay 40% higher-rate tax on the income itself, plus you lose personal allowance at the same time, which means additional income in that range is taxed twice. Many people earning in this bracket are unaware of this until their self-assessment bill arrives.

The most common ways people manage this are making pension contributions (which reduce adjusted net income) or making charitable donations through Gift Aid. Both can bring your adjusted net income below £100,000 and restore some or all of your personal allowance. There is nothing aggressive about either approach; they are straightforward reliefs that HMRC expects people to use. If your income is anywhere near £100,000, it is worth doing the sums before the tax year ends rather than after.

This taper has been in place since 2010 and receives surprisingly little attention given how many more people are now affected by it as salaries have risen while the threshold has stayed fixed.

Beyond the personal allowance, several other allowances are worth knowing about for 2026/27.

Marriage Allowance

If one partner in a married couple or civil partnership earns below the personal allowance and the other is a basic-rate taxpayer, the lower earner can transfer £1,260 of their personal allowance to their partner. This reduces the higher earner’s tax by up to £252 a year. You can backdate a claim for up to four tax years, which means some couples are owed a meaningful lump sum they have never claimed.

Personal Savings Allowance

Basic-rate taxpayers can earn up to £1,000 of savings interest tax-free each year. Higher-rate taxpayers have a £500 allowance, and additional-rate taxpayers have none. With savings rates having risen sharply over the past two years, many people have found their interest income exceeding this threshold for the first time.

Dividend Allowance

The dividend allowance has been cut significantly in recent years and now stands at £500 for 2026/27. This applies to everyone, regardless of their tax band. Income above £500 from dividends is taxed at 8.75% (basic rate), 33.75% (higher rate), or 39.35% (additional rate). For director-shareholders drawing income as a mix of salary and dividends, this reduction means more careful planning is needed around the most tax-efficient split.

Blind Person’s Allowance

If you are registered blind, you can claim an additional allowance of £3,070 for 2026/27, which reduces your taxable income further. Unused allowance can be transferred to a spouse or civil partner.

Making Tax Digital for Income Tax (MTD for IT) went live from 6 April 2026 for self-employed individuals and landlords with qualifying income over £50,000. If you are in that group and have not already set up compliant software and a process for quarterly submissions, this is urgent.

Under MTD for IT, affected taxpayers must keep digital records and submit quarterly updates to HMRC through approved software, in addition to a final end-of-period statement and a tax return. It replaces the old once-a-year self-assessment approach for those in scope.

The phased rollout continues: those with qualifying income over £30,000 join from April 2027, and those over £20,000 are expected to follow from April 2028, though the 2028 threshold is subject to confirmation. If your income is growing and you are not yet in scope, it is sensible to get digital records in order now rather than scrambling to comply later.

We use Xero, QuickBooks, FreeAgent, and Sage with clients, all of which are MTD-compatible. If you are unsure whether you are in scope or which software suits you, this is exactly the kind of question we help with as part of our ongoing accountancy services.

HMRC’s approved mileage rates have not changed for some years, but they remain one of the most straightforward deductions available to self-employed people and company directors who use their own vehicle for business travel.

For 2026/27, the approved mileage rates are:

• Cars and vans: 45p per mile for the first 10,000 business miles in the tax year, then 25p per mile thereafter
• Motorcycles: 24p per mile
• Bicycles: 20p per mile

If you are an employee who uses your own car for work and your employer does not reimburse you at the full HMRC rate, you can claim the difference through your self-assessment return. Many employees overlook this, particularly those who have started driving to client sites more regularly since hybrid working patterns changed.

For company directors, the approach is slightly different: you can either have the company reimburse you at the approved mileage rate (which is not a taxable benefit), or you can claim relief through your personal tax return. The key in both cases is keeping a mileage log. HMRC can and does request evidence, and a rough estimate written down after the fact will not stand up to scrutiny.