Tax code changes for 2026/27: what April's changes mean for take-home pay

The personal allowance remains at £12,570 for the 2026-27 tax year, frozen until April 2031 following the November 2025 Budget. The basic rate band (20%) is £12,571 to £50,270, with the higher rate threshold at £50,270 and additional rate threshold at £125,140. These thresholds have been frozen at their 2025-26 levels, meaning fiscal drag continues to push more workers into higher tax bands as wages rise. The additional rate threshold was cut from £150,000 to £125,140 in April 2023, so the 45% rate applies to income above £125,140. The personal allowance is gradually withdrawn for incomes above £100,000 at a rate of £1 per £2 of income above the threshold.

National Insurance thresholds for 2026-27 have been confirmed: the Primary Threshold (where employee Class 1 contributions start) remains at £12,570 per year, meaning employees only start paying Class 1 National Insurance once they earn above this amount. The Upper Earnings Limit remains at £50,270. This means the effective 8% rate applies between £12,570 and £50,270, with 2% above that. For self-employed people, the Small Profits Threshold for Class 2 National Insurance has increased to £7,105 (above this level Class 2 is treated as paid, so most self-employed people no longer pay it). Class 3 voluntary contribution rates are £18.40 per week. The alignment of the National Insurance Primary Threshold with the personal allowance (£12,570) is significant: it means you start paying both income tax and National Insurance at the same earnings point.

Your tax code (shown on your payslip and your P60) tells your employer how much tax-free income you are entitled to. The standard tax code, 1257L, indicates you are receiving the full personal allowance (emergency versions add W1, M1 or X). If your code includes an adjustment letter (K code), this means you have underpaid tax from a previous year or receive company benefits that increase your taxable income. Check your tax code annually by looking at your personal tax account on Gov.uk, comparing it to the standard code for your circumstances, and contacting HMRC if there is a discrepancy. Errors in your tax code can result in over- or under-payment of tax, and underpayments must eventually be repaid. Use the HMRC app to view your tax code, National Insurance record, and any correspondence from HMRC.