How we calculate
Total transparency on the numbers behind every TaxFly tool. These are the official rates and formulas we use for the 2026/27 tax year - each linked to its source.
UK tax is regional and changes yearly. Start with the tax year, nation and income type you need, then check the assumptions beside the tool. This page explains the main methods and sources for 2026/27; it is not a claim that one calculation covers every tax position.
From your inputs to an estimate
- Choose the period and nation. A tax year runs from 6 April to 5 April. An annual estimate is not necessarily the deduction on a single payslip.
- Apply the relevant allowances. Income type, pension treatment and adjusted net income can affect the allowances available.
- Tax each slice. Progressive Income Tax rates apply to the part in each band, not the whole salary. Non-savings income, savings and dividends can use different rules and stack in that order.
- Add only the deductions modelled. National Insurance, pension contributions and student loans are separate from Income Tax. Check which are included in the displayed result.
Income Tax - England, Wales & Northern Ireland
Your tax-free Personal Allowance of £12,570 is deducted first (it reduces by £1 for every £2 you earn over £100,000). The rest is taxed band by band:
| Band | Rate |
|---|---|
| Basic rate | 20% |
| Higher rate | 40% |
| Additional rate | 45% |
Source: GOV.UK - Income Tax rates and Personal Allowances.
Income Tax - Scotland
Scotland sets its own bands and rates for non-savings, non-dividend income, such as earnings and pensions. Savings interest and dividends use UK rules. The Personal Allowance is UK-wide:
| Band | Rate |
|---|---|
| Starter rate | 19% |
| Basic rate | 20% |
| Intermediate rate | 21% |
| Higher rate | 42% |
| Advanced rate | 45% |
| Top rate | 48% |
Source: GOV.UK - rates and thresholds 2026 to 2027.
National Insurance - employees (Class 1)
For a standard category A employee, the annualised estimate uses 8% on earnings between £12,570 and £50,270, then 2% above. Payroll normally calculates employee NI for each pay period, so irregular earnings and rounding can produce a different annual total. Other NI categories and directors need their own treatment. Source: GOV.UK.
Self-employed (Class 4 NI)
6% on profits between £12,570 and £50,270, then 2% above, on top of Income Tax. Source: GOV.UK - Self-employed NI.
VAT
Standard rate 20%, reduced rate 5%. Source: GOV.UK - VAT rates.
To add VAT, multiply the net price by the rate and add that tax to the price. To remove VAT, divide the gross price by one plus the rate. At 20%, £100 net becomes £120 gross; removing VAT from £120 gives £120 ÷ 1.20 = £100 net and £20 VAT. Taking 20% off the gross amount would give the wrong answer. Zero-rated and exempt supplies are different, and a price calculator does not decide which treatment applies to a sale.
Stamp duty - three taxes, three nations
England & Northern Ireland pay SDLT, Scotland pays LBTT, and Wales pays LTT. Each is progressive (rates apply only to the slice of the price within each band) and each has its own thresholds and reliefs.
Worked Income Tax example
For £60,000 of employment income in England, Wales or Northern Ireland in 2026/27, assume the standard allowance, no other income, no pension adjustment and no other reliefs. The £12,570 allowance leaves £47,430 taxable. The first £37,700 × 20% is £7,540; the remaining £9,730 × 40% is £3,892. Total Income Tax is £11,432. The 40% rate applies only to the higher slice. This is Income Tax alone, not take-home pay.
The allowance taper changes the working at higher incomes. At £120,000 of adjusted net income, the £20,000 above £100,000 reduces the allowance by £10,000, leaving £2,570. Assuming only employment income and the same UK rates, taxable income is £117,430: £37,700 × 20% plus £79,730 × 40% gives £39,432. Scottish earnings need the Scottish bands instead.
Why your payslip or return can differ
- Tax codes and timing: emergency codes, earlier pay and tax, bonuses, multiple jobs and cumulative PAYE can change a period's deduction.
- Pensions: salary sacrifice, net pay and relief at source are different arrangements. Use the mode matching your scheme; a percentage alone does not identify it.
- Other income: benefits in kind, savings, dividends, property income and earlier losses may need a more specific calculation.
- Rounding: the displayed figure is rounded for readability. Some calculators round a tapered allowance to whole pounds; the shared tax functions may retain fractions. Payroll can also round per period.
- Eligibility: a calculated relief is not confirmation that you qualify. Residence, age, ownership, timing and record-keeping conditions may apply.
How we check the working
Automated tests cover the shared tax functions using worked answers, including band boundaries, the allowance taper and regional differences. Selected Income Tax and NI results are also compared between the calculator runtime and the shared functions. These tests help catch implementation errors; they are not a claim that every calculator has received a professional review.
A recorded review identifies the staff member and date separately from the author credit. Check the page's source links, assumptions and review note. If a result looks wrong, follow our corrections policy.
Further primary sources include the Income Tax Act 2007 and the Value Added Tax Act 1994. Guidance and legislation need to be read for the relevant date and circumstances.
These calculators give estimates for general information, not personal tax, financial or legal advice. For decisions that matter, confirm with HMRC or a qualified adviser. Read our disclaimer.
TaxFly is operated by Radiant Vibes Ltd, registered in England and Wales, company number 17082185. Registered office: Unit 50 New Lydenburg Street, London, England, SE7 8NE. Contact hello@taxfly.co.uk. See our editorial standards and author profiles.