UK Budget 2026: what it means for your take-home pay
The Chancellor presents the Budget on Wednesday 28 October 2026. This page shows what is already set for the 2027/28 tax year and will be updated with the announcements on the day, with before and after figures for common salaries.
Already set for 2027/28
- Income tax thresholds frozen: the £12,570 Personal Allowance and the £37,700 basic rate band, so the higher rate starts at £50,270, are fixed in law until 5 April 2031. The additional rate still starts at £125,140, and the Personal Allowance is still withdrawn above £100,000.
- Self-employed National Insurance: Class 4 stays at 6% on profits from £12,570 to £50,270 and 2% above.
- Higher tax on savings and rental income from 6 April 2027: savings income and, outside Scotland and Wales, property income are taxed at 22%, 42% and 47% instead of 20%, 40% and 45%. Salaries are not affected.
- Dividends: the 10.75% and 35.75% rates that started in April 2026 continue; the additional rate stays at 39.35%.
- Student loans, Plan 1: the repayment threshold rises to £28,005 from 6 April 2027.
- Making Tax Digital: sole traders and landlords with turnover over £30,000 in 2025/26 must use it from 6 April 2027.
- Company cars: benefit-in-kind percentages rise by one point from April 2027, with 5% for zero-emission cars.
Announced, but not yet in law
- Employee National Insurance thresholds: announced as frozen at £12,570 and £50,270 in line with income tax, with the employer threshold at £5,000. The 2027/28 regulations are usually made early in the new year.
- Student loans, Plan 2: the previous Budget announced a freeze of the £29,385 threshold for three years from April 2027, which still needs regulations.
- Scottish higher rate thresholds: the Scottish Government has said it will keep the higher, advanced and top rate thresholds at their current levels until 2028/29; Scottish rates and the lower bands come in the Scottish Budget on 3 December 2026.
Set by the Budget each year
- The National Living Wage from April 2027: the Low Pay Commission estimates £13.02 to £13.34 an hour (central estimate £13.18), up from £12.71.
- The State Pension and other benefit rates from April 2027.
- The income tax rates for 2027/28, which Parliament sets every year.
- Any change to the threshold freezes, and the 2027/28 thresholds for Plan 4, Plan 5 and postgraduate student loans.
Fiscal drag: what frozen thresholds cost you
With thresholds frozen until April 2031, a pay rise pushes more of your income into higher bands. If your salary rises 3.5% a year, the share you pay in income tax and National Insurance grows like this:
| Salary in 2026/27 | 2026/27 | 2027/28 | 2028/29 | 2029/30 | 2030/31 |
|---|---|---|---|---|---|
| £30,000 | 16.3% £30,000 | 16.7% £31,050 | 17.0% £32,137 | 17.4% £33,262 | 17.8% £34,426 |
| £50,000 | 21.0% £50,000 | 21.6% £51,750 | 22.3% £53,561 | 23.0% £55,436 | 23.6% £57,376 |
| £80,000 | 28.8% £80,000 | 29.2% £82,800 | 29.7% £85,698 | 30.1% £88,697 | 30.5% £91,802 |
| £100,000 | 31.4% £100,000 | 32.5% £103,500 | 33.5% £107,122 | 34.4% £110,872 | 35.4% £114,752 |
Income tax and employee National Insurance as a share of gross pay, England, Wales and Northern Ireland, with the 2026/27 thresholds kept frozen (in law for income tax, announced for National Insurance) and salary rising 3.5% a year, which is an assumption, not a forecast. No pension or student loan.
Frequently asked questions
When is the UK Budget 2026?
On Wednesday 28 October 2026. The Chancellor sets out tax changes, most of which take effect from 6 April 2027 (the 2027/28 tax year).
Will income tax thresholds change in 2027/28?
Not under current law: the £12,570 Personal Allowance and the £50,270 higher rate threshold are frozen until April 2031. Only a Budget announcement could change that.
What is fiscal drag?
When tax thresholds stay frozen while pay rises, more of your income is taxed at higher rates each year. If your pay rises 3.5% a year from £45,000, you pass the £50,270 higher rate threshold in 2030/31.
Sources: GOV.UK: Budget date confirmed for 28 October 2026, Finance Act 2026, section 10 (thresholds maintained until 5 April 2031), HMRC: maintaining income tax and equivalent NICs thresholds until 5 April 2031, Finance Act 2026, section 5 (savings rates for 2027-28), Finance Act 2026, section 7 (property income rates), HM Treasury: Budget 2025, overview of tax legislation and rates, HM Treasury: Budget 2025 (Plan 2 threshold freeze), Student Loans Company: Plan 1 threshold from 6 April 2027, Low Pay Commission: 2026 consultation letter (April 2027 estimates), GOV.UK: when you need to use Making Tax Digital for Income Tax, HMRC: increasing the appropriate percentage for company cars, Scottish Government: Scottish Budget 2027-28 timetable. Work out your own pay with the UK take-home pay calculator or see what a raise is worth with the pay rise calculator.