What is Higher Rate (40%)?
The 40% income tax rate applied to taxable income between £50,271 and £125,140.
Key Facts
- ✓ Rate: 40% on income from £50,271 to £125,140
- ✓ Applies in England, Wales, and Northern Ireland
- ✓ Scotland equivalent: Higher rate is 42%
- ✓ Higher rate taxpayers can claim extra pension tax relief
- ✓ Growing number of taxpayers due to frozen thresholds
Current Rates (2025/26)
- ▸ Higher rate: 40%
- ▸ Band: £50,271 - £125,140
Explanation
The higher rate is the second main band of UK income tax, charged at 40% on taxable income between £50,271 and £125,140 for the 2025/26 tax year. In England, Wales, and Northern Ireland, you become a higher rate taxpayer once your total income exceeds £50,270. Tax is only charged at 40% on income within this band — income below £50,270 is still taxed at the basic rate (20%) or covered by your Personal Allowance (0%). The number of higher rate taxpayers has grown significantly due to fiscal drag — frozen thresholds combined with rising wages. In 2021/22 the higher rate started at £50,271, and since the threshold has not moved, wage growth alone has pushed more people into this band. Higher rate taxpayers can claim additional pension tax relief and receive reduced rates on certain allowances.
Try the calculator: Use our free calculator to see how higher rate (40%) affects your finances.
Full Tax Bands Reference →Other Glossary Terms
The system HMRC uses to collect income tax and National Insurance directly from employee wages.
National InsuranceA UK tax on earnings and self-employed profits that funds the state pension, NHS, and benefits.
Personal AllowanceThe amount of income you can earn each year before paying income tax — currently £12,570.
Basic Rate (20%)The 20% income tax rate applied to taxable income between £12,571 and £50,270.
Additional Rate (45%)The 45% income tax rate applied to taxable income above £125,140.
Stamp Duty Land Tax (SDLT)A tax paid when buying property or land in England and Northern Ireland.
Frequently Asked Questions
What does higher rate (40%) mean?
The 40% income tax rate applied to taxable income between £50,271 and £125,140.
Why does higher rate (40%) matter?
Understanding higher rate (40%) helps you make informed financial decisions and ensure you pay the correct amount of tax. Getting it wrong could mean overpaying or underpaying HMRC, which may result in penalties or missed savings. Use our calculators to see how higher rate (40%) applies to your personal situation.
Where can I find more information about higher rate (40%)?
HMRC publishes official guidance on GOV.UK for all UK tax topics. For a quick overview, our glossary entries are written in plain English and updated each tax year. You can also use our free online calculators to model different scenarios and understand how changes to your income, deductions, or allowances affect your overall tax position.