Higher-rate threshold

The higher-rate threshold is the income level at which the 20% basic rate ends and the 40% higher rate begins. It sits at £50,270 — the sum of the £12,570 Personal Allowance and the £37,700 basic-rate band.

It's frozen until April 2031. Successive Budgets have kept the threshold at £50,270 since April 2021, with the Autumn Budget 2025 extending the freeze to 2030-31. Wages that rise with inflation pull more earners into higher-rate territory each year — "fiscal drag" that raises tax without raising rates.

Class 1 National Insurance changes character at the same threshold. The 8% main rate ends at £50,270, and the 2% upper rate applies above. So crossing into higher-rate income actually reduces your combined marginal NI+tax rate by 6 percentage points (from 28% to 42%) — not the other way around — because the NI drop is larger than the income tax jump looks.

Dividend tax rates also step up here. Dividend income that falls into the higher-rate band is taxed at 35.75% (vs 10.75% at basic, for 2026-27). For Ltd directors modelling a salary/dividend split, the higher-rate threshold is the single most important number to know.

Scotland has its own bands and doesn't use the £50,270 threshold — the Scottish "Intermediate" rate ends at £43,662 and "Higher" starts there at 42%. NI, Corporation Tax and Dividend Tax are reserved matters and use UK-wide thresholds regardless of where you live.

Related terms

• Personal Allowance — The first slice of income you can earn tax-free each year — £12,570, frozen until April 2031.
• Additional rate — The top income tax band — 45% on income above £125,140 (lowered from £150,000 in April 2023).
• 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).
• Class 4 National Insurance — NI for sole traders — 6% main rate on profits between £12,570 and £50,270, 2% above.