{"id":1464,"date":"2025-06-30T07:26:08","date_gmt":"2025-06-30T07:26:08","guid":{"rendered":"https:\/\/www.simplybusiness.co.uk\/knowledge\/self-assessment\/income-tax-rates\/"},"modified":"2026-05-05T13:26:38","modified_gmt":"2026-05-05T13:26:38","slug":"income-tax-rates","status":"publish","type":"knowledge","link":"https:\/\/www.simplybusiness.co.uk\/knowledge\/business-tax\/income-tax-rates\/","title":{"rendered":"What is the 40% tax bracket? Income tax rates (2026 update)"},"content":{"rendered":"\n

More self-employed people and small business owners are being pulled into the 40% tax bracket as wages go up but income tax thresholds remain the same. In fact, nearly two million people in the UK have moved into the higher-rate income tax band since the start of this decade, according to HMRC. <\/p>\n\n\n\n

With that in mind, it\u2019s a good time to make sure you understand how much income tax you\u2019ll pay and ways to reduce your tax bill.<\/p>\n\n\n\n

UK income tax is charged on income and earnings made by individuals in any given tax year. The amount you pay is based on different tax thresholds, one of which is the 40% threshold.<\/p>\n\n\n\n

The rates and thresholds are set by the UK government (and the Scottish Parliament), and tax is collected by HMRC. These rates can change with announcements by the chancellor.<\/p>\n\n\n\n

Higher rate income tax \u2013 what is the 40% threshold?<\/h2>\n\n\n\n

The 40% tax bracket applies to anyone who lives in England, Wales, and Northern Ireland. <\/p>\n\n\n\n

Anyone who earns over \u00a350,271 a year will fall into this higher rate 40% tax bracket. You won\u2019t pay 40% on all of this, just anything over that amount. This is because income tax is calculated based on different thresholds.<\/p>\n\n\n\n

The higher rate of tax is paid on earnings between \u00a350,271 and \u00a3125,140. Later on in this article we\u2019ll cover the tax rates for people in Scotland<\/a>.  <\/p>\n\n\n\n

If you\u2019re self-employed or a small business owner and registered for Self Assessment<\/a>, you\u2019ll pay your income tax by filing your tax return. <\/p>\n\n\n\n

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Read more: <\/strong>How the self-employed report and pay income tax for Self Assessment is changing with Making Tax Digital<\/a>. Find out what you should be doing now<\/a>.<\/p>\n<\/div>\n\n\n\n

Will the 40% tax bracket increase? <\/h2>\n\n\n\n

Experts<\/a> are calling for the higher rate income tax bracket to increase to \u00a375,000. This is because wages have risen while thresholds have remained the same, meaning more people are dragged into paying a higher rate of tax. <\/p>\n\n\n\n

While the income tax rates in Scotland have increased for the 2026-27 tax year, rates in the rest of the UK have remained frozen. <\/p>\n\n\n\n

Figures show 5.76 million people were paying the higher rate for the 2023-24 tax year, according to HMRC. A report in the Independent<\/a> highlights this is up 50% from 3.83 million in 2019-20. <\/p>\n\n\n\n

Income tax thresholds frozen<\/h3>\n\n\n\n

In November 2025, the Chancellor Rachel Reeves announced that income tax thresholds would remain frozen until April 2031. At which point, tax rates will rise inline with inflation, which could mean fewer self-employed people are paying a higher rate of tax. The freeze relates to tax rates for England, Wales, and Northern Ireland as Scotland sets its own rates.<\/p>\n\n\n\n

A complete guide to income tax for the self-employed<\/h2>\n\n\n\n

This guide covers everything you need to know about current income tax rates and bands for the self-employed, including:<\/p>\n\n\n\n

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