| Personal allowance | £12,570, frozen until 2030/31 |
| Rates in England, Wales, Northern Ireland | 20%, 40%, 45% |
| Rates in Scotland | 19% to 48% in six bands |
| Interest | personal savings allowance £1,000, £500 or nil |
| Dividends | £500 allowance, rates 10.75%, 35.75%, 39.35% |
| ISA | £20,000 a year tax-free; the cash ISA cut was cancelled |
| Updated | November 2026 |
Income tax 2026/27 in England, Wales and Northern Ireland
The tax year runs from 6 April 2026 to 5 April 2027. Up to £12,570 your income is tax-free; that is the personal allowance. Then three bands apply. Only Scotland has different bands.
| Band | Taxable income | Rate |
|---|---|---|
| Personal allowance | up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | over £125,140 | 45% |
GOV.UK: Income Tax rates and Personal Allowances, Finance Act 2026 s2
Income tax 2026/27 in Scotland
If you live in Scotland, you pay Scottish income tax on earnings, pension and most other income; the money goes to the Scottish Government. You can tell by the S in front of your tax code, S1257L in the standard case. Interest and dividends are taxed at UK rates in Scotland too.
| Band | Taxable income | Rate |
|---|---|---|
| Personal allowance | up to £12,570 | 0% |
| Starter rate | £12,571 to £16,537 | 19% |
| Basic rate | £16,538 to £29,526 | 20% |
| Intermediate rate | £29,527 to £43,662 | 21% |
| Higher rate | £43,663 to £75,000 | 42% |
| Advanced rate | £75,001 to £125,140 | 45% |
| Top rate | over £125,140 | 48% |
GOV.UK: Income Tax in Scotland
The personal allowance, the £100,000 trap and the marriage allowance
From adjusted net income of £100,000 the personal allowance shrinks: for every £2 above, £1 of allowance goes, and from £125,140 it is gone entirely. In that corridor you effectively pay 40% on each extra pound plus 20% on the lost allowance, around 60% in all. Pension contributions and Gift Aid donations reduce adjusted net income, and that is exactly where they pay most.
Allowances do not rise with inflation. The Finance Act 2026 froze the £12,570 personal allowance and the £37,700 basic rate band up to and including 2030/31. Every pay rise slips into higher bands faster.
Couples have the marriage allowance: if one spouse or civil partner earns less than the personal allowance, they can transfer £1,260 of it to the other, who saves up to £252 a year. The recipient must be a basic rate taxpayer, or in Scotland a starter, basic or intermediate rate taxpayer. Unmarried couples miss out.
Savings interest: the personal savings allowance and the starting rate
Interest has its own allowance, the personal savings allowance: £1,000 for basic rate taxpayers, £500 for higher rate taxpayers, nothing for additional rate taxpayers. If your other income is below £17,570, the starting rate for savings can also make up to £5,000 of interest tax-free. That limit is frozen until 2030/31. Banks report interest to HMRC after the end of the tax year; the rest runs through your tax code or Self Assessment.
Anything above costs 20%, 40% or 45% in 2026/27. That changes markedly from 6 April 2027. The Finance Act 2026 has already set 22%, 42% and 47% for 2027/28. Budget 2026 of 28 October 2026 wants to add another two points, to 24%, 44% and 49%; that comes with the Finance Bill 2026-27 and is not yet law. The allowance and the starting rate stay the same. The same increase is announced for rental income. Every change with its status is in what changes in 2026.
Dividends: £500 free, then from 10.75%
The dividend allowance is £500 a year. Above it you have paid, since 6 April 2026, 10.75% as a basic rate taxpayer, 35.75% as a higher rate taxpayer and 39.35% as an additional rate taxpayer. The Finance Act 2026 raised the two lower rates by two points each. Your total income including dividends decides the band.
Up to £10,000 of dividends you can have the tax collected through your tax code; above that you need a Self Assessment return. Dividends from shares inside an ISA stay tax-free. How foreign funds and the portfolio you bring are taxed after the move is in pensions and investments in the UK.
ISAs: saving and investing tax-free
An Individual Savings Account is an account or portfolio in which interest, dividends and gains stay completely tax-free; you report nothing of it in your return. You can pay in up to £20,000 in the 2026/27 tax year, spread across four types: cash ISA, stocks and shares ISA, innovative finance ISA and Lifetime ISA. You can open one from age 18 if you are UK resident; you need your National Insurance number for it. You cannot transfer shares you already own into an ISA, only new money. With a flexible ISA you may withdraw and pay back in within the same tax year without losing allowance.
The Lifetime ISA is for a first home or retirement: open it between 18 and 39, pay in up to £4,000 a year, and the state adds 25%, at most £1,000 a year. Withdraw for any other reason and you pay a 25% charge. Since 29 October 2026 it is only 20% if you use the money for a first home above the £450,000 price cap.
What is changing: Budget 2025 had announced a £12,000 cap on cash ISAs for under-65s from April 2027. Budget 2026 cancelled it. The cut will not take effect, the regulations are to be revoked in November 2026, and the cash ISA limit stays at £20,000. The overall limits of £20,000 for ISAs and £4,000 for the Lifetime ISA are fixed until 5 April 2031. From April 2029 a First Time Buyer ISA is to replace the Lifetime ISA for new savers, with £4,000 a year, a 25% bonus and a total bonus of at most £20,000. The government is also looking at a new incentive for first-time investors in the stocks and shares ISA; there are no details yet.
One point for newcomers: the ISA's tax freedom is a UK rule. Whether your home country recognises it if you go back later is a separate question for your planning.
Council tax in one paragraph
Council tax is the local charge on homes, paid by residents aged 18 or over, whether tenants or owners. The amount depends on your home's valuation band in England and Wales or in Scotland and on your council's rate. If you live alone, you get 25% off on application. New from 1 April 2028 in England is the High Value Council Tax Surcharge on homes worth £2 million or more, from £2,500 to £7,500 a year; it is being legislated in the Finance Bill 2026-27. If you are buying, there is more in buying a home in England.
Frequently asked questions about everyday tax
What is the top rate of income tax in England?
45% on taxable income over £125,140, 48% in Scotland. On dividends the top rate is 39.35%.
Can I open an ISA as a foreign national?
Yes, if you are at least 18 and UK tax resident. Your nationality plays no part, but you do need your National Insurance number.
Do I pay UK tax on interest from my savings account back home?
As a UK resident, generally yes, unless the FIG regime exempts your foreign income in your first four years.
Is tax on savings interest going up?
Yes. Rates rise from 6 April 2027: to 22%, 42% and 47% under the Finance Act 2026, and to 24%, 44% and 49% as planned in Budget 2026. The personal savings allowance stays.
Does Scottish income tax apply to interest?
No. For interest and dividends Scottish taxpayers pay the same rates as the rest of the UK.
Sources: GOV.UK: Income Tax rates and Personal Allowances; GOV.UK: Income Tax in Scotland; GOV.UK: Tax on savings interest; GOV.UK: Tax on dividends; GOV.UK: Individual Savings Accounts; GOV.UK: Lifetime ISA; GOV.UK: Tax-free savings newsletter 24, October 2026; GOV.UK: Marriage Allowance; GOV.UK: How Council Tax works; legislation.gov.uk: Finance Act 2026; GOV.UK: Income Tax, changes to tax rates for property and savings income (Budget 2026)
