What's New for 2025/26?
The 2025/26 tax year began on 6 April 2025 and brings meaningful changes — particularly for employers and anyone whose income sits near key thresholds. For employees, the headline rates are largely unchanged, but the continued freeze of the Personal Allowance at £12,570 means fiscal drag continues to push more taxpayers into higher bands year on year.
The biggest structural change affects employers. From April 2025, the employer secondary NI threshold dropped from £9,100 to £5,000 per year — meaning employers must start paying NI on employee earnings from £5,000, not £9,100. The employer NI rate simultaneously increased from 13.8% to 15%. These changes add significant cost to employing people and have been widely flagged by businesses as a constraint on hiring and wage growth.
2025/26 Income Tax Bands — England, Wales & Northern Ireland
| Band | Taxable Income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 – £50,270 | 20% |
| Higher Rate | £50,271 – £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
National Insurance 2025/26 — Employee Rates
| Band | Annual Earnings | Employee Rate |
|---|---|---|
| Below Primary Threshold | Up to £12,570 | 0% |
| Main Rate | £12,570 – £50,270 | 8% |
| Upper Rate | Over £50,270 | 2% |
Employer National Insurance 2025/26 — Key Change
| 2024/25 | 2025/26 | Change | |
|---|---|---|---|
| Employer NI Rate | 13.8% | 15.0% | +1.2% |
| Secondary Threshold | £9,100/yr | £5,000/yr | −£4,100 |
| Extra cost on £35k salary | ~£3,572 | ~£4,500 | +£928 |
Student Loan Repayment Thresholds 2025/26
| Plan | Threshold | Rate | Written off |
|---|---|---|---|
| Plan 1 (pre-Sept 2012) | £24,990/yr | 9% | Age 65 or 25yrs |
| Plan 2 (Sept 2012–Jul 2023) | £27,295/yr | 9% | 30 years |
| Plan 4 (Scotland) | £31,395/yr | 9% | Age 65 or 30yrs |
| Plan 5 (Aug 2023+) | £25,000/yr | 9% | 40 years |
How Pension Salary Sacrifice Works
A salary sacrifice pension arrangement reduces your gross pay before tax and NI are calculated. This means a 5% contribution on a £40,000 salary reduces your taxable pay to £38,000. You save income tax and National Insurance on the contributed amount — a basic-rate taxpayer saves 28p (20p tax + 8p NI) per £1 of pension contribution.
For higher-rate taxpayers the saving increases to 48p per £1 (40p tax + 8p NI). And for anyone between £100,000 and £125,140, bringing income below £100,000 through pension contributions saves at an effective rate of 60p per £1 — making pension contributions by far the most tax-efficient action available.
2025/26 Quick Reference — Approximate Take-Home Pay
| Gross Salary | Income Tax | NI | Take-Home | Per Month |
|---|---|---|---|---|
| £20,000 | £1,486 | £595 | £17,919 | £1,493 |
| £25,000 | £2,486 | £1,994 | £20,520 | £1,710 |
| £30,000 | £3,486 | £1,394 | £25,120 | £2,093 |
| £40,000 | £5,486 | £2,194 | £32,320 | £2,693 |
| £50,000 | £7,486 | £3,014 | £39,500 | £3,292 |
| £60,000 | £11,432 | £3,234 | £45,334 | £3,778 |
| £80,000 | £19,432 | £3,634 | £56,934 | £4,745 |
| £100,000 | £27,432 | £4,034 | £68,534 | £5,711 |
Estimates only — no pension, no student loan, standard 1257L tax code. Use the calculator above for your exact figures.
Frequently Asked Questions
Has anything changed for employees in 2025/26?
For most employees, the headline picture is largely unchanged from 2024/25. The Personal Allowance, income tax bands, and employee NI rates are all frozen at their 2024/25 levels. The significant change is for employers — higher employer NI and a lower secondary threshold — which affects business costs but not employees' pay slips directly.
Why is my take-home lower than expected?
The most common reasons: the Personal Allowance freeze pulling you into a higher band; a student loan repayment starting or increasing as your salary crossed the threshold; pension auto-enrolment; or a non-standard tax code (for example, a K code or one that includes a benefit-in-kind like a company car).
Is the Marriage Allowance worth claiming?
If one partner earns under £12,570 and the other is a basic-rate taxpayer (earning £12,571–£50,270), yes — they can transfer up to £1,260 of Personal Allowance, saving up to £252 per year in tax. It can be backdated up to 4 tax years, potentially saving over £1,000 in a single claim. Apply via HMRC's website.