What is Higher Rate Tax? UK Definition 2026/27
Quick Answer
The 40% UK income tax rate on earnings between £50,271 and £125,140.
Definition of Higher Rate Tax
Higher rate tax is the second band of UK income tax, charged at 40% on taxable income from £50,271 to £125,140 in 2026/27. Higher rate taxpayers also pay more on dividends (33.75%) and savings (interest over £500 personal savings allowance). National Insurance continues at 2% above the Upper Earnings Limit.
Higher Rate Tax — Key Facts for 2026/27
| Higher Rate | 40% |
| Band 2026/27 | £50,271 - £125,140 |
| Dividend rate | 33.75% |
| Savings allowance | £500 |
How Higher Rate Tax Works — Example
- 1Personal Allowance: £12,570
- 2Basic rate: £37,700 × 20% = £7,540
- 3Higher rate: £29,730 × 40% = £11,892
- 4Total tax: £19,432
- 5Plus NI: ~£4,400
- 6Take home: ~£56,168
How Higher Rate Tax Affects Your Tax
Higher rate taxpayers benefit significantly from pension contributions (40% tax relief) and should maximise tax-efficient investments. The frozen threshold means more people are becoming higher rate taxpayers through fiscal drag.
Official HMRC Guidance on Higher Rate Tax
For official guidance, refer to HMRC's documentation. Tax rules can change, so always verify current rates and thresholds on gov.uk.
HMRC: Income Tax ratesFrequently Asked Questions about Higher Rate Tax
Related Tax Terms
Accuracy Note
This information is for guidance only and is based on 2026/27 tax year rates. Tax rules are complex and your circumstances may differ. For personal advice, consult a qualified accountant or tax adviser.