Direct taxes: Rates and allowances for 2025/26

Direct taxes are paid directly by the taxpayer to the government. For individuals, the main direct taxes in the UK are income tax and national insurance contributions. Indirect taxes are collected by another party – such as a retailer or a producer – and then paid to the government. The main indirect taxes in the UK are value added tax (VAT) and excise duties, charged on alcohol, tobacco, and road fuel.

This briefing sets out direct tax rates and principal tax allowances for the 2025/26 tax year. It describes eligibility criteria for these tax allowances and provides a summary of the general tax position in straightforward cases.

This briefing deals with tax allowances, but not with benefits provided under the social security system, child tax credit or working tax credit.

Income tax

Income tax on earned income is charged at three rates: the basic rate, the higher rate and the additional rate.

For 2025/26 these three rates are 20%, 40% and 45% respectively.

No tax is charged on income up to the personal allowance, which is set at £12,570 for 2025/26. The personal allowance has been set at this level since April 2022 and is due to remain there until April 2028.

The next £37,700 of income (up to the higher rate threshold, set at £50,270) is charged tax at the basic rate, set at 20%.

Income above the higher rate threshold, up to the additional rate threshold (£125,140) is taxed at the 40% rate. Income above £125,140 is taxed at the 45% rate.

The personal allowance starts to get withdrawn gradually for earnings above £100,000. Once earnings reach £125,140, the personal allowance is completely withdrawn. In other words, the personal allowance is £0.

All three tax rates and thresholds are unchanged from 2024/25.

Personal allowance

The personal allowance for income tax is set at £12,570 for 2024/25. Like the basic rate limit, the personal allowance has been fixed in value since 2021/22.

Marriage allowance

Married couples and civil partners may be entitled to claim the marriage allowance. Individuals whose income is insufficient to make full use of their personal allowance can transfer this unused fraction to their spouse or civil partner, up to a set amount.

Individuals cannot make use of this provision if their spouse or partner pays more than the basic rate of tax (20%).

For 2025/26 the maximum that can be transferred is £1,260.

National insurance contributions

The main rate of National Insurance contributions (NICs) for employees is set at 8% for 2025/26. The Conservative government reduced this rate from 12% to 10% at the 2023 Autumn Statement , and from 10% to 8% at the 2024 Spring Budget.

The main rate is charged on all earnings between the primary threshold (£242 a week) and the upper earnings limit (£967 a week). These thresholds are aligned with the income tax personal allowance and higher rate threshold.

Employee earnings above the upper earnings limit are charged at 2%.

These thresholds and rates are unchanged from 2024/25.

The rate of NICs for employers is set at 15% on earnings above the secondary threshold (set at £96 per week). The rate is increased from 2024/25, where it was set at 13.8%. The threshold is decreased from 2024/25, where it was set at £175 per week. These changes were announced by Chancellor Rachel Reeves at the 2024 Autumn Budget .

Further information

Details of tax rates and allowances as well as tax credits for the 2025/26 year are set out in Annex A to HM Revenue & Customs, Overview of Tax Legislation and Rates, November 2024 published alongside the Autumn 2024 Budget.