Glossary

Short definitions as used on this site for the 2026/27 tax year. Not legal definitions.

Personal allowance

£12,570 of income on which you pay no income tax, if you have the standard allowance. Reduced by £1 for every £2 of income above £100,000. Gone at £125,140.

Basic rate / higher rate (rest of UK)

In England, Wales and Northern Ireland: 20% on the next £37,700 after the allowance (up to a total income of £50,270 with a full allowance), then 40% up to £125,140, then 45%.

Scottish bands

Six rates from 19% to 48% on non-savings, non-dividend income. National Insurance is still the UK employee rates.

Employee National Insurance

Class 1 primary contributions. For category A in 2026/27: 8% between the primary threshold (£12,570) and the upper earnings limit (£50,270), then 2% above. Calculated per pay period in real payroll; this lab models the year.

Net pay arrangement

Pension taken from pay so that taxable pay falls, but National Insurance is usually still calculated on the unreduced figure.

Salary sacrifice

You give up part of salary; the employer pays that amount into the pension. Taxable pay and NI-able earnings both fall in a typical arrangement. Scheme paperwork decides the real treatment.

Student loan plans

Plan 1, 2, 4 and 5 repay 9% of earnings above a plan threshold. Postgraduate loans repay 6% above £21,000. Thresholds used here are the 2026/27 HMRC collection figures.

Last checked September 2026.