Question 1

What is the Personal Allowance in the UK for 2026/27?

Accepted Answer

The Personal Allowance is £12,570 for 2026/27. It remains frozen until April 2031 under current government plans. You can earn this amount before paying any income tax. If your income exceeds £100,000, the allowance gradually reduces, and it is fully withdrawn at £125,140.

Question 2

What is the 60% tax trap?

Accepted Answer

Between £100,000 and £125,140 in adjusted net income, the Personal Allowance is tapered away at a rate of £1 for every £2 earned. In England and Wales, this creates an effective marginal income tax rate of 60% (40% on income itself, plus 20% on the extra £0.50 of newly taxable income per £1 earned). Pension contributions are the most common way to reduce adjusted net income below £100,000 to avoid this trap.

Question 3

What National Insurance rate do I pay in 2026/27?

Accepted Answer

Employees pay Class 1 NI at 8% on earnings between £12,570 and £50,270, and 2% on earnings above £50,270 in 2026/27. Self-employed workers pay Class 4 NI at 6% on profits between £12,570 and £50,270, and 2% above that. Class 2 contributions are £3.65 per week in 2026/27 for self-employed workers above the small profits threshold.

Question 4

Do Scottish taxpayers pay different National Insurance?

Accepted Answer

No. National Insurance is a UK-wide tax collected by HMRC and the rates are the same across England, Wales, Scotland, and Northern Ireland. Only income tax rates differ for Scottish taxpayers, as set by the Scottish Parliament.

Question 5

How does salary sacrifice work?

Accepted Answer

With salary sacrifice, your employer reduces your contractual salary by the pension contribution amount and pays it directly into your pension. Because the contribution comes out before PAYE and NI are calculated, you save income tax at your marginal rate AND 8% (or 2%) in NI. Your employer also saves NI on the contribution, and some employers pass this saving back to you. It is usually more tax-efficient than making personal pension contributions.

Question 6

Which student loan plan am I on?

Accepted Answer

Plan 1: English or Welsh students who started university before 1 September 2012, or Scottish students who took out an income-contingent loan before 2007. Plan 2: English or Welsh students who started on or after 1 September 2012 up to July 2023. Plan 4: Scottish students from 2007 onwards. Plan 5: English or Welsh students starting from August 2023. For 2026/27, the annual repayment thresholds are £26,900 for Plan 1, £29,385 for Plan 2, £33,795 for Plan 4, £25,000 for Plan 5, and £21,000 for postgraduate loans.

Question 7

What is the Marriage Allowance?

Accepted Answer

If one partner earns below the Personal Allowance (or has no income) and the other is a basic-rate taxpayer, the lower earner can transfer £1,260 of their Personal Allowance to their partner. This gives the receiving partner a £252 tax credit, saving £252 per year. It cannot be used if the receiving partner pays higher or additional rate tax.

UK Income Tax Calculator 2026/27