Earning more feels great. Doesn’t it? However, for many UK professionals, earning more means paying a higher rate of tax on portions of their income. Therefore, one of the most commonly discussed bands is the 40 tax bracket UK.
If you are crossing the threshold into the 40% higher-rate tax bracket, it means an unexpected mix of financial pride and confusion. Let’s break down how the 40% tax band works in the UK, who it applies to, and what it means in practice.
What is the 40 Tax Bracket UK?
Let’s clear up the confusion of earning more leading to paying more tax on portions of your income. The UK tax system has designed tax bands, and the 40 percent tax bracket is one of them. It is the higher rate income tax band that applies to income above the basic rate threshold and below the additional rate threshold.
In the UK, this rate applies to taxable income between £50,271 and £125,140 for the 2024/25 tax year. Furthermore, it is a marginal tax rate, which means it only applies to the portion of income, not the entire income.
It is important to note that this is for the 2026/27 tax year and rules may change over time. Look at the table below that highlights the UK Income Tax band structure:
| Tax band | Taxable income | Tax rate |
| Personal Allowance | Up to £12,570 | No tax |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | over £125,140 | 45% |
What Is the 40 Tax Threshold?
While understanding the 40 tax bracket UK, many people wonder what the 40% tax threshold is. To put it simply, it is the level of income at which a taxpayer starts paying the 40% higher rate of income tax. This tax is not applied to your entire income but on the portion of your income above that threshold.
For the 2026/27 tax year, the 40% tax threshold is £50,270 in England, Wales, and Northern Ireland. This means if your annual taxable income is £50,270 or less, you do not pay 40% tax. And, if your income is above £50,270, only the amount over £50,270 is taxed at 40% (a higher rate).
Example of 40 Tax Bracket UK
Let’s understand this concept with an example:
Let’s say you earn £60,000. The first £12,570 will be tax-free because of your personal allowance (if eligible).
The next £37,700 will then be taxed at 20% (basic rate), and the remaining £9,730 (the amount above £50,270) will be taxed at 40% (higher rate).
So, the 40% tax threshold is £50,270. This marks the point at which the higher rate of income tax begins. However, it does not mean your entire income is taxed at a higher rate.
What Is Personal Allowance and Tax Relief?
To understand the 40 tax bracket UK, you need to learn the concept of personal allowance and tax relief. The personal allowance is a specific amount of income that an individual is permitted to earn each tax year before they must begin paying Income Tax. It lets most people earn up to £12,570 each tax year, provided their adjusted net income does not exceed £100,000.
Net income more than £100,000 means reduced Personal Allowance by £1 for every £2 of income above this threshold. As a result, Personal Allowance is withdrawn once the income reaches £125,140.
When Do You Pay 40 Tax?
Typically, a person enters the 40 tax bracket UK if their taxable income exceeds £50,270 per year (for most of the UK). This includes employment income, bonuses and commissions, self-employment profits, rental income (after allowances), and certain investment income.
When Does 40 Tax Start?
For the 2026/27 tax year, the 40% higher rate of income tax starts when your taxable income is between £50,271 and £125,140. As discussed, if the taxable income exceeds £50,270, only 40% tax is paid on the portion above this threshold. Taxable income below this threshold continues to be taxed at 20% under the UK’s tax system.
Do I Take Home Less After Entering the 40 Tax Bracket UK?
No, only the income above the higher-rate threshold is taxed at 40%. You always take home more after receiving a pay rise.
How Much Do You Earn to Pay 40 Tax?
Most UK taxpayers begin paying the higher rate once taxable income exceeds £50,270 (for the relevant tax year in England, Wales and Northern Ireland).
What Is the 60% Tax Trap?
One crucial thing to understand when explaining the UK’s 40% tax bracket is the 60% tax trap. It refers to the effective marginal tax rate faced by individuals with an adjusted net income between £100,000 and £125,140.
Keep in mind that the 60% tax trap is not an official income tax band. However, the Personal Allowance is reduced by £1 for every £2 earned over £100,000. As a result, you pay the higher 40% income tax rate on additional earnings and also lose part of your tax-free Personal Allowance. And, once your income is £125,140, your Personal Allowance is fully withdrawn.
Can I Reduce My 40% Tax Liability?
Yes, you can reduce your taxable income. There are several legal methods to lower the amount subject to the 40 tax bracket UK, such as:
Pension Contributions
Pension contributions are an effective tax-planning strategy for higher-rate taxpayers. These contributions can successfully reduce your adjusted net income. Additionally, they can increase your retirement savings and help preserve your Personal Allowance if your income exceeds £100,000.
Salary Sacrifice
Under this concept, if your company offers a salary sacrifice scheme, you exchange part of your salary for pension contributions. You can also exchange part of your salary for certain workplace benefits.
This may reduce your taxable income and could keep some or all of your earnings below the higher-rate threshold. Furthermore, in some cases, it reduces your NICs.
Marriage Allowance
Marriage Allowance can reduce your overall tax bill if your spouse or civil partner earns less than the Personal Allowance and is a basic-rate taxpayer. However, if the receiving partner is a higher-rate taxpayer, you cannot claim marriage allowance. Therefore, it is not usually a way to reduce a 40% tax bill.
Gift Aid Donations
If you make donations through Gift Aid, it can also reduce your tax bill. The UK government treats Gift Aid like you donated a bigger amount than you actually paid.
This can extend your basic-rate tax band, which means some of your income may be taxed at 20% instead of 40%. Therefore, you pay less higher-rate tax overall. Furthermore, if you are a higher-rate taxpayer, you can also claim extra tax back from HMRC.
The Bottom Line
The 40 tax bracket UK is a key part of the progressive tax system in the UK. It affects individuals earning over £50,270.
The 40% tax bracket may feel like a big jump in taxation, but it only applies to income above the threshold, not your entire salary. You can manage or reduce your exposure to the higher rate with proper planning, such as pension contributions and tax-efficient savings.
Additionally, understand how this band works and stay informed to make informed financial decisions and optimise long-term income.
How Accotax Can Help?
If you are earning near or within the 40 tax bracket UK, or you are worried about falling into the 60% tax trap, it is best to speak to a qualified accountant.
At Accotax, we have a team of accountants who understand UK higher-rate tax planning and can structure your income more efficiently from the start. We can help you prepare your tax return, claim all eligible reliefs, and guide you on tax-efficient investments.
Disclaimer: All the information provided in this article on “What Is the 40 Tax Bracket UK? A Complete Guide“, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.
