In 2026/27 a basic-rate taxpayer earning more than £16,370 pays £760 a year more Income Tax than if the 2020/21 Personal Allowance (£12,500) and basic rate limit (£37,500) had risen with CPI inflation, which was 31.0% from April 2020 to April 2026. Higher-rate taxpayers with income between £65,480 and £125,140 pay £3,802 more. The Personal Allowance has been £12,570 and the higher-rate threshold £50,270 since April 2021, and the Budget on 26 November 2025 kept both at those levels until 5 April 2031: see what the Autumn 2025 Budget changed for 2026/27. HMRC counted 3.98 million higher-rate taxpayers in 2020/21 and projects 7.08 million for 2025/26. The figures are Income Tax only, for one tax year, in cash terms; the method is set out below.
Download the dataset
The UK Fiscal Drag Tracker dataset is published under Creative Commons Attribution 4.0 (CC BY 4.0) — free for journalists, researchers, and analysts to use with attribution.
- Download CSV — spreadsheet-friendly, machine-readable
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Citation: "UK Tax Drag (2026), 'UK Fiscal Drag Tracker 2026/27', uktaxdrag.co.uk/uk-fiscal-drag-tracker-2026-27.html". For press queries, use the contact form — see also our press kit.
Headline numbers — 2026/27 vs 2020/21
| Metric | 2020/21 | 2026/27 | Change |
|---|---|---|---|
| Personal Allowance | £12,500 | £12,570 | +0.6% |
| Higher rate threshold (England and Northern Ireland) | £50,000 | £50,270 | +0.5% |
| Additional rate threshold | £150,000 | £125,140 | −16.6% |
| HICBC threshold | £50,000 | £60,000 | +20.0% |
| CGT allowance | £12,300 | £3,000 | −75.6% |
| Dividend allowance | £2,000 | £500 | −75.0% |
| CPI index, April (April 2020 = 100) | 100 | 131.0 | +31.0% |
Median annual pay for full-time employees was £31,461 in the year to April 2020 and £39,039 in April 2025 (provisional), a rise of 24.1% (ONS Annual Survey of Hours and Earnings). Over that time the Personal Allowance went from 40% of the median to 32%, and the higher-rate threshold from 1.59 times the median to 1.29 times.
Extra Income Tax by salary in 2026/27
Each row compares two Income Tax bills on the same 2026/27 salary. The first uses the actual 2026/27 thresholds. The second uses 2026/27 rates with the 2020/21 Personal Allowance and basic rate limit uprated by CPI to £16,370 and £49,110, the Personal Allowance taper still starting at £100,000, and the additional rate starting at £150,000 as it did in 2020/21. The last column is the extra tax for 2026/27 alone.
| Salary in 2026/27 | Income Tax, actual thresholds | Income Tax, CPI-uprated 2020/21 thresholds | Extra Income Tax in 2026/27 |
|---|---|---|---|
| £20,000 | £1,486 | £726 | £760 |
| £30,000 | £3,486 | £2,726 | £760 |
| £40,000 | £5,486 | £4,726 | £760 |
| £50,000 | £7,486 | £6,726 | £760 |
| £60,000 | £11,432 | £8,726 | £2,706 |
| £80,000 | £19,432 | £15,630 | £3,802 |
| £100,000 | £27,432 | £23,630 | £3,802 |
| £120,000 | £39,432 | £35,630 | £3,802 |
| £150,000 | £53,703 | £50,178 | £3,525 |
What this covers: Income Tax only, using the England, Wales and Northern Ireland bands, on employment income with no pension contributions or other reliefs. Scottish taxpayers have different bands. National Insurance is left out because its thresholds and rates moved separately: the primary threshold was £9,500 with a 12% main rate in 2020/21, and is £12,570 with an 8% main rate in 2026/27. The figures are for one tax year and are not added up across years.
The "extra higher-rate payer" effect
HMRC's Income Tax liabilities statistics count the people who pay tax at the higher rate (40%):
| Year | Higher-rate taxpayers | % of taxpayers | Basis |
|---|---|---|---|
| 2020/21 | 3.98 million | 12.6% | Outturn |
| 2022/23 | 5.10 million | 14.8% | Outturn |
| 2025/26 | 7.08 million | 18.1% | HMRC projection |
Sources: HMRC Income Tax liabilities statistics published in June 2024 (2020/21 outturn) and June 2025 (2022/23 outturn and 2025/26 projection). Pay rises, employment and changes in other income also affect these counts, so not all of the increase comes from frozen thresholds.
The 60% band between £100,000 and £125,140
Between £100,000 and £125,140 of adjusted net income the Personal Allowance is withdrawn at £1 for every £2 of income, so each extra £1 in that band costs 60p in Income Tax. The £100,000 starting point was the same in 2020/21, and the additional-rate threshold fell from £150,000 to £125,140 in 2023/24. In the salary table, the extra 2026/27 Income Tax at £100,000 and £120,000 is £3,802, the same as at £80,000, because both calculations start the taper at £100,000.
How long do current freezes last?
The Budget 2025 policy paper published on 26 November 2025 sets out the current position:
- Personal Allowance (£12,570) and higher-rate threshold (£50,270): maintained until 5 April 2031.
- National Insurance primary threshold (£12,570) and upper earnings limit (£50,270): maintained until 5 April 2031.
- Additional rate threshold: £125,140 since 6 April 2023.
- HICBC: the charge starts at £60,000 of adjusted net income and equals the full Child Benefit at £80,000, since 6 April 2024.
- CGT annual exempt amount: £3,000 in 2026/27.
- Dividend allowance: £500 in 2026/27.
Methodology — how this is calculated
For each salary in the table:
- Work out 2026/27 Income Tax with the actual thresholds: Personal Allowance £12,570, basic rate limit £37,700, allowance taper from £100,000, additional rate above £125,140.
- Uprate the 2020/21 Personal Allowance (£12,500) and basic rate limit (£37,500) by CPI from April 2020 (index 108.5) to April 2026 (index 142.1), a rise of 31.0%, rounding to the nearest £10: £16,370 and £49,110.
- Work out 2026/27 Income Tax again with those uprated amounts, the taper still starting at £100,000 and the additional rate starting at £150,000, as in 2020/21.
- Subtract the second figure from the first. The result is the extra Income Tax for 2026/27, in cash terms.
CPI is the ONS consumer prices index (series D7BT, 2015 = 100). The downloadable dataset's CPI column uses April of the year each tax year starts, with April 2020 = 100. A different month or index, or uprating other thresholds as well, would give different figures.
Source data: GOV.UK rates and thresholds for 2020/21, 2021/22, 2023/24 and 2026/27; ONS CPI; ONS Annual Survey of Hours and Earnings; HMRC Income Tax liabilities statistics.
License + citation
This tracker is published under Creative Commons Attribution 4.0 (CC BY 4.0). You're free to share, adapt, and republish provided you credit UK Tax Drag and link back to this page.
Suggested citation: "UK Tax Drag (2026), 'UK Fiscal Drag Tracker 2026/27', https://uktaxdrag.co.uk/uk-fiscal-drag-tracker-2026-27.html"
For journalists and researchers: the underlying dataset (JSON/CSV) is available at fiscal-drag-tracker-2026-27.json. This edition covers the 2026/27 tax year. Send questions via the contact form.
Updates and version history
- v1.0 — May 2026: Initial publication, 2026/27 tax year, baseline year 2020/21.
- v1.1: Downloadable JSON and CSV generated from one source file so that they match the page.
- v1.2 — 14 September 2026: Salary table recalculated as Income Tax only for 2026/27, with CPI to April 2026 (31.0%); CPI index column corrected to ONS April values; higher-rate taxpayer counts replaced with HMRC's published figures; freeze end date corrected to 5 April 2031; the unsupported £2,140 headline figure and the estimated numbers of taxpayers in the 60% band removed.
Sources and methodology
Tax thresholds: GOV.UK rates and thresholds for employers 2020 to 2021, 2021 to 2022 and 2023 to 2024; GOV.UK Income Tax rates for 2026 to 2027; the Budget 2025 policy paper on maintaining thresholds until 5 April 2031. Inflation: ONS CPI index D7BT, April 2020 to April 2026. Pay: ONS Annual Survey of Hours and Earnings, 2020 and 2025 (provisional). Higher-rate taxpayers: HMRC Income Tax liabilities statistics, June 2024 and June 2025. The methodology page documents the broader review process.
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