Do I Need to Pay Income Tax? UK Guide 2026/27

You usually pay UK Income Tax when your taxable income is more than your available tax-free allowances. For most people in 2026/27, the standard Personal Allowance is £12,570. The answer can differ if you have several income sources, earn over £100,000, live in Scotland or qualify for another allowance.

This guide explains the main 2026/27 rules for the tax year from 6 April 2026 to 5 April 2027. Income Tax and National Insurance are separate calculations.

Quick 2026/27 check

1. Add your taxable income from employment, pensions, self-employment, property, savings, dividends and other taxable sources.
2. Deduct allowable expenses and any reliefs that apply.
3. Check your Personal Allowance and any specific savings or dividend allowances.
4. Apply the correct rates for where you live and the type of income.
5. Check whether tax has already been collected through PAYE or whether you must tell HMRC.

Income Tax bands for England, Wales and Northern Ireland

For 2026/27, the standard Personal Allowance is £12,570. The main rates on non-savings, non-dividend income are:

Your Personal Allowance falls by £1 for every £2 of adjusted net income above £100,000. It is normally nil once adjusted net income reaches £125,140. Pension contributions and Gift Aid can affect adjusted net income, so higher earners should calculate it carefully.

Scottish taxpayers

Scottish Income Tax bands and rates apply to most employment, pension, property and self-employed income of Scottish taxpayers. They differ from the rest of the UK. UK-wide rules continue to apply to savings and dividend income. Use HMRC’s current Scottish Income Tax table rather than applying the England, Wales and Northern Ireland bands.

What income should you include?

Common taxable sources include salary and benefits, trading profits, pensions, rental profit, taxable savings interest, dividends and some state benefits. Not every receipt is taxable: examples that are normally tax-free include income within an ISA and certain benefits. Turnover is not the same as taxable profit; a sole trader or landlord deducts allowable business or property expenses before tax is calculated.

Tax-free amounts do not always remove reporting duties

Separate rules apply to savings interest and dividends. In 2026/27 the dividend allowance is £500. The Personal Savings Allowance is generally £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers, with none for additional-rate taxpayers. These are nil-rate bands rather than deductions from total income.

The £1,000 trading allowance and £1,000 property allowance may help people with small amounts of relevant gross income, but eligibility rules and elections matter. Do not automatically deduct an allowance where actual expenses are being claimed.

PAYE versus Self Assessment

Employees and many pensioners normally have Income Tax collected through PAYE. Check your payslip, P60, P45 and tax code because a wrong code can collect too much or too little. Having PAYE does not guarantee that all tax on property, investments or other income has been settled.

You may need Self Assessment where HMRC has issued a notice to file or your circumstances fall within its filing rules. Typical triggers can include self-employment with gross trading income over £1,000, untaxed property income, capital gains that must be reported, foreign income or the High Income Child Benefit Charge. Use HMRC’s online checker because no single earnings figure decides every case.

Simple examples

Employee earning £12,000

If £12,000 is the person’s only taxable income and they have the full Personal Allowance, no Income Tax is normally due. National Insurance must still be checked separately.

Employee earning £30,000

With the full allowance and no other adjustments, £17,430 is taxable. At the 20% basic rate, the indicative Income Tax is £3,486 before considering tax already deducted or other reliefs.

Salary plus rental income

An employee earning £45,000 who also makes £10,000 taxable rental profit may enter the higher-rate band. PAYE on salary does not automatically deal with all property tax, and Self Assessment may be required.

Making Tax Digital for Income Tax

From 6 April 2026, some sole traders and landlords with qualifying gross income over £50,000 must use Making Tax Digital for Income Tax. The threshold is based on qualifying self-employment and property income, not salary, dividends or partnership profit. HMRC’s checker should be used because start dates and exemptions depend on individual circumstances.

What to do next

• Review all income sources for the tax year, not only salary.
• Check your Personal Tax Account and PAYE tax code.
• Keep P60s, P11Ds, invoices, expense records, bank interest statements and dividend vouchers.
• Use HMRC’s tax-return checker if you have untaxed or complex income.
• Speak to a tax adviser where residence, foreign income, trusts, large pension contributions or the £100,000 allowance taper applies.

Official sources

• GOV.UK: Income Tax rates and Personal Allowances
• GOV.UK: Scottish Income Tax
• HMRC: check if you need a Self Assessment tax return
• HMRC: Making Tax Digital for Income Tax checker

Tax rules depend on personal circumstances and can change. This guide is general information, not personalised tax advice.