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Understanding Your Tax
Key things every UK worker should know about their pay
Personal Allowance
For 2025/26 the standard personal allowance is £12,570. This is the amount you can earn before paying any income tax. If you earn over £100,000 your allowance is gradually reduced.
Income Tax Bands
Basic rate tax (20%) applies from £12,571 to £50,270. Higher rate (40%) applies from £50,271 to £125,140. The additional rate of 45% applies above £125,140.
National Insurance
Employees pay 8% NI on earnings between £12,570 and £50,270, and 2% on earnings above that. NI contributions fund the NHS and your State Pension entitlement.
Your Tax Code
1257L is the most common tax code, reflecting the standard personal allowance. If your code is different, it may mean HMRC is collecting tax from a previous year or you have additional allowances.
📊 2025/26 Income Tax Bands (England, Wales & NI)
| Band | Taxable Income | Tax Rate | Tax Due (on band) |
|---|---|---|---|
| Personal Allowance | Up to £12,570 | 0% | £0 |
| Basic Rate | £12,571 – £50,270 | 20% | Up to £7,540 |
| Higher Rate | £50,271 – £125,140 | 40% | Up to £29,948 |
| Additional Rate | Over £125,140 | 45% | 45p per £1 |