UK methodology (tax year 2026/27)
Income Tax
Personal allowance £12,570, reduced by £1 for every £2 of income above £100,000 (zero from £125,140). Tax code 1257L assumed.
| Band (taxable income) | England/Wales/NI | Scotland |
|---|---|---|
| Basic / starter zone | 20% to £37,700 | 19% to £3,967, 20% to £16,956, 21% to £31,092 |
| Higher | 40% £37,701-£125,140 | 42% £31,093-£62,430, 45% £62,431-£125,140 |
| Additional / top | 45% above £125,140 | 48% above £125,140 |
National Insurance (employee, category A)
8% between the primary threshold (£12,570) and the upper earnings limit (£50,270), 2% above. We compute NI on an annualised basis, which matches even monthly pay; one-off bonuses are taxed per pay period in reality and can differ slightly. Employer NI (shown as information): 15% above £5,000.
Student loans
Plan 1 £26,900 · Plan 2 £29,385 · Plan 4 £33,795 · Plan 5 £25,000, all at 9%. Postgraduate loan £21,000 at 6%.
Pension
Modelled as salary sacrifice: contributions reduce pay for Income Tax, NI and student loans. Relief-at-source schemes differ slightly for higher-rate taxpayers.
Tax-year selector
The salary calculator also covers 2025/26: identical rUK bands and NI, narrower Scottish starter/basic bands (19% to £2,827, 20% to £14,921), student-loan thresholds Plan 1 £26,065 / Plan 2 £28,470 / Plan 4 £32,745, and no Plan 5 deductions (repayments began 6 April 2026). Source: HMRC rates and thresholds for employers 2025 to 2026.
Self-employed (sole trader)
Income Tax on total income (profit plus any salary) with the statutory £12,570 allowance, not the 1257L payroll figure; the tax on profit is the difference to tax on salary alone. Class 4 NI 6% on profit between £12,570 and £50,270 and 2% above. Class 2 is not charged; profit from £7,105 is credited. The £1,000 trading allowance replaces expenses when larger. Payments on account are 50% of Income Tax and Class 4 (student loans excluded) when that bill is £1,000 or more and under 80% was paid at source. Checked against hand-worked fixtures at £30,000, £50,000 and £80,000 profit and Scotland £50,000. Sources: gov.uk Self-employed National Insurance rates, Understand your Self Assessment tax bill.
Limited company, dividends and IR35
Dividends at 10.75%, 35.75% and 39.35% (Finance Act 2026 s4) with the £500 nil rate, taxed as the top slice of income on UK-wide bands even for Scottish taxpayers; unused Personal Allowance covers dividends first and the allowance tapers on total income. Corporation tax FY2026: 19% to £50,000, 25% from £250,000, marginal relief of 3/200 × (£250,000 minus profit) between, limits divided by one plus associated companies. Employer NI 15% above £5,000, Employment Allowance only when the director is not the only employee. All profit after corporation tax is distributed unless you choose to keep some in the company. IR35 inside: the umbrella margin, 15% employer NI and 0.5% levy are taken from the assignment rate before PAYE (market practice, not law). Outside: £12,570 salary plus dividends. Fixtures at £60,000 and £100,000 profit with £12,570 and £5,000 salaries and at £500 a day for 220 days match to within 2 pence. Sources: Finance Act 2025 ss13 to 14, CTA 2010 ss18A to 18E, gov.uk Rates and thresholds for employers 2026 to 2027.
Source and verification
Figures from HMRC "Rates and thresholds for employers 2026 to 2027" (gov.uk). Engine covered by automated tests including the £100k-£125k allowance taper and Scottish bands. Not yet cent-reconciled against HMRC's PAYE calculator for per-period payroll; annual figures match the published rules exactly.