The 50p tax rate was the UK’s top income tax rate between April 2010 and April 2013, charging 50% on taxable income above £150,000. It was cut to 45% from April 2013 and has stayed at that level in England, Wales, and Northern Ireland ever since, though Scotland now sets its own top rate of 48%. The threshold at which the top rate kicks in has since fallen sharply: today the 45% additional rate applies to income above £125,140, not £150,000.1GOV.UK. Income Tax Rates and Personal Allowances
Where the 50p Rate Came From and Why It Went
The 50p rate was announced in the April 2009 Budget as part of a package intended to raise over £6 billion by 2012 in the wake of the global financial crisis.2House of Commons Library. Income Tax: The Additional 50p Rate It took effect from April 2010 on incomes above £150,000, and the Office for Budget Responsibility estimated it would raise roughly £2.7 billion a year.3Office for Budget Responsibility. Economic and Fiscal Outlook – The Additional Rate of Income Tax
It lasted three tax years. The Finance Act 2012 reduced it to 45% from April 2013, with the government arguing that revenue fell short of projections because high earners changed their behaviour to avoid the charge.4HM Revenue and Customs. Finance Bill 2012 Explanatory Notes The 45% additional rate has stayed in place across England, Wales, and Northern Ireland since then. Scotland has taken a different path and now charges more at the top.
The Top Rate Today: 45% (or 48% in Scotland)
UK income tax is a marginal system. Each slice of income is taxed at its own rate; your whole salary is not taxed at the top band. For 2025–26 and 2026–27, the bands for England, Wales, and Northern Ireland are:1GOV.UK. Income Tax Rates and Personal Allowances
- Personal allowance up to £12,570: 0%
- Basic rate £12,571 to £50,270: 20%
- Higher rate £50,271 to £125,140: 40%
- Additional rate above £125,140: 45%
The additional rate threshold used to be £150,000, matching the old 50p rate. The 2022 Autumn Statement lowered it to £125,140 from April 2023, aligning it with the point at which the personal allowance has tapered to zero. That single change brought an estimated 250,000 more people into the top band. The figure £125,140 is not arbitrary: it equals £100,000 plus twice the £12,570 personal allowance, which is the income at which the allowance runs out.
A worked example makes the marginal system clearer. Someone earning £150,000 pays nothing on the first £12,570, 20% on the next £37,700, 40% on the next £74,870, and 45% on the final £24,860. The total bill comes to roughly £48,675, an effective rate of about 32.5%. The headline 45% only ever applies to the pounds above £125,140.
Scotland sets its own rates on non-savings, non-dividend income. For 2026–27, Scotland’s top rate is 48%, three percentage points above the rest of the UK. The Scottish bands look quite different lower down too:5Scottish Government. Scottish Income Tax 2026 to 2027: Technical Factsheet
- Starter rate £12,571 to £16,537: 19%
- Basic rate £16,538 to £29,526: 20%
- Intermediate rate £29,527 to £43,662: 21%
- Higher rate £43,663 to £75,000: 42%
- Advanced rate £75,001 to £125,140: 45%
- Top rate above £125,140: 48%
Scotland’s 45% advanced rate on income between £75,001 and £125,140 means Scottish taxpayers hit an England-equivalent additional rate at a much lower income level. Savings and dividend income is still taxed at the UK-wide rates wherever you live in the UK.
The 60% Trap Between £100,000 and £125,140
The standard personal allowance of £12,570 starts shrinking once your adjusted net income passes £100,000. For every £2 you earn above that level, you lose £1 of the allowance, until it disappears entirely at £125,140.6GOV.UK. Income Tax Rates and Allowances for Current and Previous Tax Years The mechanism sits in Section 35 of the Income Tax Act 2007.7Legislation.gov.uk. Income Tax Act 2007 – Section 35
The result is an effective marginal rate of 60% in that band. Every extra pound of income is taxed at 40%, and you also lose 50p of tax-free allowance, which is then taxed at 40% too. Add the two together: 40p plus 20p, 60p in tax on every extra pound earned. For a Scottish taxpayer in that income range, the equivalent figure reaches 63%.
The most common response is a pension contribution large enough to bring adjusted net income back below £100,000. Pension contributions come off before the taper is calculated, so a modest contribution can restore the whole personal allowance. Gift Aid donations work the same way. Additional rate taxpayers can also claim back the difference between their rate and the basic rate the charity has already reclaimed, either through self-assessment or by asking HMRC to adjust their tax code.8GOV.UK. Tax Relief When You Donate to a Charity: Gift Aid
How Different Income Types Are Taxed at the Top
Once you are over £125,140, the rate depends on the type of income.
Dividends
Dividend income above the £500 tax-free dividend allowance is taxed at 39.35% for additional rate taxpayers.9GOV.UK. Tax on Dividends The dividend allowance has dropped from £2,000 to £1,000 and now £500, so even modest portfolios held outside an ISA now generate a bill.
Savings Interest
Savings interest is taxed at the full 45% additional rate. Basic rate taxpayers get a £1,000 personal savings allowance and higher rate taxpayers get £500; additional rate taxpayers get nothing.
Capital Gains
Capital gains are taxed separately from income, but your income tax band sets the rate. From April 2025, additional rate taxpayers pay 24% on residential property gains and 24% on other assets, with a 32% rate on carried interest for investment fund managers.10GOV.UK. Capital Gains Tax: What You Pay It On, Rates and Allowances
Employment income, self-employment profits, pension income, and rental income are added together to determine which band applies. The additional rate hits whichever slice of that total sits above £125,140.
National Insurance Sits on Top
Income tax is not the only deduction from a payslip. For employees, National Insurance contributions drop to 2% on earnings above the Upper Earnings Limit (£967 per week, roughly £50,270 a year for 2025–26), and that 2% applies without a ceiling.11GOV.UK. National Insurance Rates and Categories: Contribution Rates So the true combined marginal deduction on employment income for an additional rate taxpayer is 47% in England, Wales, and Northern Ireland, or 50% in Scotland.
Self-employed people pay Class 4 National Insurance at a reduced rate on profits above the upper profits limit. Either way, National Insurance is easy to leave out of a mental calculation of take-home pay.
Frozen Thresholds Are Pulling More People In
Income tax thresholds have been frozen since 2021, and the freeze has been extended more than once. The personal allowance (£12,570), the higher rate threshold (£50,270), and the additional rate threshold (£125,140) will hold at their current levels until at least April 2028, with the personal allowance and main National Insurance thresholds frozen through April 2031.12House of Commons Library. Fiscal Drag: An Explainer
This is fiscal drag. Wages rise with inflation, thresholds do not, and more income each year falls into higher bands. Someone earning £120,000 in 2021 sat well below the old £150,000 additional rate threshold. Ordinary pay rises since then may now leave the same person above £125,140 and paying the additional rate, with no change in the tax law itself.
Self-Assessment Once You’re in the Top Band
Crossing the additional rate threshold almost always brings you into self-assessment. PAYE alone often will not collect the right amount, especially where dividend income, rental income, or capital gains sit alongside a salary. Anyone with income above £150,000, or with untaxed income, needs to file.
The online return and any tax owed are both due by 31 January following the end of the tax year.13GOV.UK. Self Assessment Tax Returns: Deadlines Missing that date triggers an automatic £100 penalty, with more added the longer the return remains outstanding. Payments on account, due in January and July, apply if the previous year’s bill exceeded £1,000 after PAYE, which almost every additional rate taxpayer will face. Those payments on account are what first-time filers most often fail to budget for.