Additional Rate Tax 2025/26
The 45% £125,140 Band

The additional rate is the top band of UK income tax, charged at 45% on the highest slice of income. For 2025/26 it begins at £125,140 in England, Wales and Northern Ireland, an oddly specific number that confuses almost everyone who sees it. That precision is not arbitrary: the threshold is deliberately set at the exact point where the Personal Allowance has been fully withdrawn, and understanding that link is the key to understanding why the most punishing tax rate in the system actually sits just below the additional rate, not at it.

This page explains the 2025/26 figure, the arithmetic that produces the unusual £125,140 threshold, the 60% trap that precedes it, who counts as an additional-rate taxpayer, the D1 tax code, and how Scotland pushes its top rate to 48%. If you earn anywhere near six figures, the interactions below matter more than the headline 45%.

The 2025/26 Additional Rate Figure

The additional rate of 45% applies to taxable income above £125,140. This threshold was lowered from £150,000 to £125,140 in April 2023 and has stayed there since, pulling far more people into the top band than the old £150,000 limit ever did.

Note what the additional rate does not come with: by the time you reach it, your Personal Allowance is already gone entirely, so every pound of income is taxable. For the complete set of bands from the tax-free allowance upward, see our guide to income tax rates and thresholds.

Why £125,140? The Hidden Arithmetic

The strange threshold is the most-asked question about the additional rate, and the answer is elegant once you see it. The Personal Allowance is withdrawn at a rate of £1 for every £2 of income above £100,000. A full allowance is £12,570, so it takes twice that, £25,140, of excess income to wipe it out completely.

Add the £25,140 of taper to the £100,000 starting point and you arrive at £125,140. The government chose to align the additional rate threshold precisely with the end of the taper, so that the moment your allowance hits zero is the moment the 45% rate begins. It is one number doing two jobs.

The 60% Trap: Worse Than the Top Rate

Here is the counter-intuitive heart of this page. The most heavily taxed income in the entire system is not the income taxed at 45%. It is the £25,140 stretch between £100,000 and £125,140, where the allowance is tapering away.

In that band, every extra £2 of income costs you £1 of Personal Allowance. That lost £1 becomes taxable at 40%, on top of the 40% you already pay on the income itself. The combined effect is a 60% effective marginal rate, higher than the 45% you pay once you are clear of the taper. In other words, a pound earned at £110,000 is taxed harder, at the margin, than a pound earned at £130,000.

Worked example: £124,000 vs £130,000

Compare two earners in 2025/26:

• Aisha on £124,000 is inside the taper. Her income is £24,000 over £100,000, so her allowance is cut by £12,000 to just £570. Her marginal rate on her last slice of income is 60%.
• Ben on £130,000 is past the taper. His allowance is fully gone, but he is no longer losing any, so his marginal rate on the top £4,860 is the flat 45% additional rate.

Counter-intuitively, Ben's last pound is taxed more lightly than Aisha's. This is why high earners around £100,000 to £125,140 lean so heavily on pension contributions: putting money into a pension reduces adjusted net income, restores Personal Allowance, and can unwind the 60% trap entirely. Model your own position with the salary tax calculator.

What Additional Rate Taxpayers Lose

Reaching the top band strips away reliefs that lower earners keep, which is why the effective burden is heavier than 45% alone implies.

• No Personal Savings Allowance. Basic-rate taxpayers get £1,000 of tax-free interest and higher-rate taxpayers get £500. Additional-rate taxpayers get nothing, so every pound of savings interest is taxable.
• Top dividend rate. Dividends above the £500 Dividend Allowance are taxed at 39.35% for additional-rate payers, the highest dividend rate.
• No Marriage Allowance. You cannot receive a transferred Marriage Allowance, as it is only available where the recipient is a basic-rate taxpayer.
• Pension annual allowance taper. Very high earners may also see their £60,000 pension annual allowance tapered down, limiting how much they can contribute tax-efficiently to escape the income tax bands above.

The upside is that pension contributions and Gift Aid attract 45% relief at this level, the most generous rate available, usually reclaimed through Self Assessment.

Scotland: A 48% Top Rate

Scottish taxpayers, identified by an S prefix such as S1257L, face an even steeper top band. Scotland's top rate is 48%, three percentage points above the rest of the UK's 45%, and it begins at the same £125,140 threshold.

So a Scottish additional (top) rate taxpayer pays 48% on income above £125,140, while a Welsh or English taxpayer on the same income pays 45%. Wales uses a C-prefix code and currently mirrors the rest of the UK exactly, so the Welsh additional rate is 45% at £125,140. The £125,140 threshold itself is the same across all four nations because it is tied to the Westminster-set Personal Allowance taper.

The D1 Tax Code

The additional rate can appear directly in a tax code as D1. A D1 code instructs payroll to tax all of that income at 45% with no Personal Allowance, and it is normally used for a second job or pension where your main income has already absorbed every lower band. The Scottish version is SD1 (taxing at 48%) and the Welsh version is CD1.

A D1 code is correct only when it is taxing genuinely additional income that all sits in the top band. If it has somehow been applied to your sole source of income, it would tax everything at 45% and ignore your allowance entirely, a very expensive error. Always check an unexpected D1 code promptly.

Additional Rate Sole Traders and Making Tax Digital

For the self-employed, the £125,140 threshold applies to taxable profit just as it applies to a salary. A sole trader pays 45% on profit above £125,140, with the Personal Allowance already fully tapered away, plus Class 4 National Insurance charged separately.

Any sole trader at this level of income is comfortably inside Making Tax Digital for Income Tax, which begins in April 2026 for those with qualifying income above £50,000. From that date you must keep digital records and submit four cumulative quarterly updates plus a final declaration each year, with lower thresholds (£30,000 in April 2027 and £20,000 in April 2028) following. High-earning sole traders also have the most to gain from accurate in-year tracking, because pension contributions made before the year end can shift profit out of the 60% trap and the additional rate alike. TapTax keeps the running tally and files your quarterly updates to HMRC with a single tap, so you always know where your profit sits against £100,000 and £125,140.