Tax Rates and Allowances
Income Tax Rates And Allowances
| Main allowances | 2027/28 | 2026/27 |
|---|---|---|
| Personal Allowance*† | £12,570 | £12,570 |
| Blind Person’s Allowance | £3,250 | £3,130 |
| Married Couple’s Allowance (born before 6/4/35) ** | £12,110 | £11,700 |
| Income limit for age-related allowances | £40,600 | £39,200 |
| Dividend and Savings Allowances | ||
| Dividend Tax Allowance (DTA) § | £500 | £500 |
| Personal Savings Allowance (basic rate taxpayer) | £1,000 | £1,000 |
| Personal Savings Allowance (higher rate taxpayer) | £500 | £500 |
*Personal Allowance (PA) will be withdrawn at £1 for every £2 by which ‘adjusted income’ exceeds £100,000. There will therefore be no allowance given if adjusted income is £125,140 or more.
†Up to 10% of the PA (£1,260) can be transferred to a spouse or civil partner who is no more than a basic rate taxpayer.
**Married Couple’s Allowance is reduced by £1 for every £2 by which adjusted income exceeds the income limit, down to a minimum of £4,690 (2026/27 £4,530)
§The DTA taxes the first £500 of dividend income at nil rather than the rate that would otherwise apply – see rates below. The Personal Savings Allowance (PSA) operates as a nil rate band for interest income.
| Rate bands | 2027/28 | 2026/27 |
|---|---|---|
| Basic | £37,700 | £37,700 |
| Higher | £37,701-£125,140 | £37,701-£125,140 |
| Additional | over £125,140 | over £125,140 |
2027/28 for General, Savings and Dividend income within each band:
| Rate bands | G | S | D |
|---|---|---|---|
| Basic | 20% | 24% | 10.75% |
| Higher | 40% | 44% | 35.75% |
| Additional | 45% | 47% | 39.35% |
In 2026/27, Property income was taxed as part of General income (20%, 40% and 45%). Savings income was also taxed at 20%, 40% and 45%. Dividend income rates were 10.75%, 35.75% and 39.35%.
General income (salary, pensions, business profits) uses Personal Allowance, basic rate, and higher rate bands before Savings Property and Dividend income (interest). To the extent that savings income falls in the first £5,000 of the basic rate band, it is taxed at nil rather than 24%. The PSA (see above) will tax interest at nil where it would otherwise be taxable at 24% or 44%.
High Income Child Benefit Charge (HICBC)
1% of child benefit for each £200 of net income between £60,000 and £80,000.
