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Your 2026/27 tax thresholds: what's frozen and what it means for your pay

Published 4 July 2026 · 4 min read

For another year, the main Income Tax thresholds in England, Wales and Northern Ireland are frozen. The personal allowance stays at £12,570 and the higher-rate threshold at £50,270. On the surface, "no change" sounds harmless. In practice, frozen thresholds quietly raise the tax most people pay — an effect known as fiscal drag.

How fiscal drag works

Normally, tax thresholds rise a little each year in line with inflation. When they are frozen instead, any pay rise pushes a bigger slice of your income above the tax-free allowance — and, for some, over the £50,270 line into 40% tax. You can earn the same in real terms yet hand over more in tax. Because it happens automatically, without a headline rate rise, it's easy to miss.

The 2026/27 bands at a glance

Scotland sets its own bands, from a 19% starter rate up to a 48% top rate, so Scottish taxpayers see a different picture.

Watch the £100,000 trap

One threshold that isn't frozen but catches more people every year is the £100,000 mark. Above it, your personal allowance is withdrawn by £1 for every £2 you earn, creating an effective marginal tax rate of around 60% between £100,000 and £125,140. Pension contributions are the usual way people manage this, because they reduce the income the taper is based on.

What to do about it

You can't change the thresholds, but you can see exactly how they affect you. Check your take-home pay for the current year, and if a pay rise or bonus pushes you near £50,270 or £100,000, model the difference before deciding what to do with salary sacrifice or pension contributions.

This article is general information, not financial or tax advice. Figures are based on 2026/27 rates published by GOV.UK and may change at a future Budget. Check GOV.UK or speak to a qualified adviser before making decisions.