For the 2026/27 UK tax year, an individual receives the standard Personal Allowance with no taper applied. Their taxable income, after the allowance, falls entirely within the band from £50,271 to £125,140. Which rate applies to income within this band?
- 20%, the basic rate
- 40%, the higher rate
- 45%, the additional rate
- 0%, because it falls within the Personal Allowance
Correct answer: B. 40%, the higher rate
For 2026/27, income from £50,271 up to £125,140 falls within the higher rate band and is taxed at 40%, making the second option correct. The basic rate of 20% applies only to income from £12,571 up to £50,270, a lower band that ends well before £125,140, so describing the £50,271-£125,140 range as basic rate misapplies the wrong band's rate to it. The additional rate of 45% only applies to income above £125,140, so applying it to income that tops out at £125,140 overstates the rate for this range. The Personal Allowance covers only the first £12,570 of income before any taper; income in the £50,271-£125,140 range is far above the allowance and is fully taxable, so treating it as covered by the allowance is incorrect.
Source: GOV.UK: Income Tax rates and Personal Allowances — current rates and thresholds