Your marginal tax rate is the percentage of your next pound of income that goes to income tax + NI. It is different from your average tax rate. In the UK in 2026/27, marginal rates can be 0%, 20%, 28%, 42%, 62%, 47% or higher depending on income band, family situation and student-loan status.
How marginal rate is different from effective rate
The two numbers people confuse:
- Effective tax rate = total tax + NI paid ÷ total gross income. Always averages out below your top band.
- Marginal tax rate = tax + NI charged on the next £1 of income. Always equal to or higher than your effective rate.
On a £50,000 salary the effective rate is about 21%, but the marginal rate is 42% — because the next £1 of pay is taxed at 40% IT + 2% NI. That gap is what makes salary sacrifice and pension contributions so much more powerful at higher incomes than the effective rate suggests.
UK marginal rates by income band (2026/27)
| Income band | Income tax | NI | Combined |
|---|---|---|---|
| £0 – £12,570 | 0% | 0% | 0% |
| £12,571 – £50,270 | 20% | 8% | 28% |
| £50,271 – £100,000 | 40% | 2% | 42% |
| £100,001 – £125,140 (60% trap) | 40% + PA taper | 2% | 62% |
| £125,141+ | 45% | 2% | 47% |
Add 9% on top if you have a Plan 5 student loan above the £25,000 threshold, 6% for postgraduate loan, or up to 11% for parents losing Child Benefit between £60,000 and £80,000 (HICBC). The highest realistic combined marginal rate in the UK system tops out around 71% for high earners with student loans and HICBC.
Why marginal rate matters more than effective rate for decisions
Example: someone earning £100,000 with two children. Effective tax rate ~31%. Marginal rate ~71% (40% IT + 2% NI + 20% PA taper effect + ~10% HICBC clawback). A £5,000 bonus at this position takes home about £1,450 after deductions — but sacrificed into pension, all £5,000 lands in the pot.
The marginal rate calculator shows your exact rate with family circumstances and student loans factored in.
Common mistakes about marginal rate
Find your exact marginal rate
Enter your salary, family situation, pension contributions and student loan to see your real marginal rate — including the bands where it spikes.
Open the marginal rate calculator →Sources and methodology
UK 2026/27 income tax rates and Personal Allowance taper are HMRC's published figures (gov.uk/income-tax-rates). National Insurance rates from gov.uk/national-insurance-rates-letters. HICBC framework from gov.uk/child-benefit-tax-charge. Student loan repayment thresholds and rates from gov.uk/repaying-your-student-loan.
UK Tax Drag is not authorised by the Financial Conduct Authority and does not provide regulated financial advice — see the content disclaimer for the full position. The methodology page documents how every calculator is built and reviewed.
Related
- The 60% tax trap explained — why the marginal rate spikes between £100k and £125,140
- Marginal tax rate calculator — interactive tool with student loan and HICBC factors
- What is adjusted net income? — the trigger for the 60% trap and HICBC
- Should I salary sacrifice? — how marginal rate drives the salary sacrifice decision
- Full UK money glossary
- FAQ library
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