What is Basic Rate Tax? UK Definition 2026/27
Quick Answer
The 20% income tax rate applied to earnings between £12,571 and £50,270 in 2026/27.
Definition of Basic Rate Tax
The basic rate is the first band of income tax that applies to earnings above your Personal Allowance. For 2026/27, it's 20% on income between £12,571 and £50,270 (the basic rate band of £37,700).
Most UK taxpayers pay only basic rate tax. The basic rate also applies to savings interest above your Personal Savings Allowance and rental income. Different rates apply in Scotland.
Basic Rate Tax — Key Facts for 2026/27
| Rate | 20% |
| Band | £12,571 - £50,270 |
| Band width | £37,700 |
| Scottish basic rate | 20% (different bands) |
How Basic Rate Tax Works — Example
- 1Annual salary: £35,000
- 2Personal Allowance: £12,570 (tax-free)
- 3Taxable income: £35,000 - £12,570 = £22,430
- 4All within basic rate band
- 5Income tax: £22,430 × 20% = £4,486
How Basic Rate Tax Affects Your Tax
Understanding the basic rate band helps with tax planning. Pension contributions and Gift Aid donations extend your basic rate band, potentially keeping you below the higher rate threshold.
Official HMRC Guidance on Basic 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 rates and bandsFrequently Asked Questions about Basic 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.