Additional rate

The additional rate is the top band of UK income tax: 45% on income above £125,140. The threshold was £150,000 until April 2023, when it was lowered to £125,140 — aligning with the point where the Personal Allowance is fully tapered away.

The band it replaces (£100,000 to £125,140) is where UK tax hits its harshest marginal rate. Personal Allowance tapers by £1 for every £2 of income above £100,000, fully gone by £125,140. Combined with the 40% higher rate, the effective marginal rate on that slice is 60% — higher than the 45% additional rate that kicks in above it.

Dividend income above £125,140 is taxed at 39.35% (the additional rate for dividends). Combined with 25% Corporation Tax already paid at this profit level, a pound of profit extracted as a dividend at the additional rate is left at about 45p — an effective all-in rate of around 55%.

Class 1 and Class 4 NI stay at the 2% upper rate through this band — there's no further NI step at £125,140. So the step up from higher rate to additional rate is a flat 5 percentage points on income tax plus 5.6 points on dividend tax. That's a meaningful jump for big-salary/big-dividend scenarios, but mild compared to the 60% PA-taper zone below it.

Scotland's "Advanced" rate (45%) applies from £75,000 and its "Top" rate (48%) from £125,140 — Scottish taxpayers see a harsher schedule across the middle-and-upper bands.

Related terms

• Higher-rate threshold — The point where income tax jumps from 20% to 40% — £50,270, frozen until April 2031.
• Personal Allowance — The first slice of income you can earn tax-free each year — £12,570, frozen until April 2031.
• Dividend tax — The tax charged on dividend income above the £500 dividend allowance — 10.75%, 35.75%, or 39.35% depending on your tax band (2026-27).