Region
Series
Children in childcare
Select at least one region and one series to plot.
Rate bands
Assumptions & sources
- The full personal allowance is assumed — no marriage allowance, blind person's allowance or other adjustment. The figures panel above is generated from the data for the selected tax year, so it is always in step with the chart; the notes below describe the rules, and the illustrative numbers in them hold for every tax year currently included.
- Allowance taper. The personal allowance is reduced by £1 for every £2 of income above £100,000, reaching nil at £125,140. That withdrawal is what produces the marginal spike to 60% (rest of UK) and 67.5% (Scotland) across that £25,140 stretch.
- Employee National Insurance is Class 1, category A: 8% between the primary threshold (£12,570) and the upper earnings limit (£50,270), then 2% above. Rates and thresholds are the same across the whole UK — Scotland does not set NI. Real NI is charged per pay period, not annually; this chart annualises it, which matches an employee on level pay through the year.
- Scotland uses the Scottish rates and bands for non-savings, non-dividend income: starter 19%, basic 20%, intermediate 21%, higher 42%, advanced 45%, top 48%. The Scottish higher-rate threshold (£43,662) sits below the NI upper earnings limit (£50,270), so between those two points a Scottish employee pays 42% + 8% = 50% at the margin — the highest combined rate below £100,000 anywhere in the UK.
- High income child benefit charge (HICBC). The charge claws back 1% of the year's child benefit for every £200 of income above the threshold, so it is fully withdrawn once income is £20,000 past it. Spread across that span it adds (annual benefit ÷ 20,000) to the marginal rate. It applies UK-wide, Scotland included. The weekly rates and thresholds for the selected year are listed above.
- HICBC assumptions. The charge falls on whichever partner has the higher adjusted net income, and this chart assumes that is the person shown, with adjusted net income equal to the gross income on the x-axis. Strictly the clawback moves in 1% steps per £200 rather than as a smooth ramp, so the real line is a fine sawtooth; it is drawn as a level band, which is how the charge is normally modelled. Opting out of payments avoids the charge and so removes this effect entirely.
- Employer NI and the two bases. Employer (secondary Class 1) NI for has no upper limit — the rate applies to everything above the secondary threshold. It is paid by the employer on top of gross pay rather than deducted from it, so adding it to a rate measured against gross pay would mix two different denominators. On the employee basis it is therefore excluded entirely. On the total employment cost basis the denominator changes instead: an extra £1 of salary costs the employer £1.15, so every rate becomes (employee rate + 15) ÷ 1.15 — the measure usually called the tax wedge. The x-axis stays gross salary on both, so the familiar thresholds do not move. Employer NI is selectable as its own line, but only on the cost basis — on the employee basis it is absent from the combined line, and a component that did not add up to the total would mislead.
- What the cost basis reveals. Because the secondary threshold (£5,000) sits well below the personal allowance (£12,570), there is a £7,570 band in which the employee pays nothing at all yet the wedge is already 13.0%. Scotland's peak rises from 69.5% to 73.5%.
- Employer NI caveats. The £10,500 Employment Allowance is granted per employer, not per employee, so it cannot be shown on a per-person curve. Secondary NI is also 0% up to £50,270 for employees under 21, apprentices under 25, and qualifying veterans in their first year — none of which is modelled. Whether employer NI is ultimately borne by the worker through lower wages is a claim about the long run, not about any individual payslip.
- Student loans. Deductions are a flat percentage of earnings above the plan threshold, and an undergraduate plan stacks with a postgraduate loan, so someone with both pays the two rates combined once past both thresholds. Which plan applies depends on where and when you studied, not where you now pay income tax: Plan 4 is for Scottish loans and can apply to someone taxed in England, and vice versa. Thresholds and rates for the selected year are listed above, and the plans on offer change with the year.
- Why there is no Plan 5. Plan 5 covers English courses starting on or after 1 August 2023, but no Plan 5 repayments were due before April 2026 — the first Plan 5 statutory repayment date fell in the 2026/27 year. It is therefore offered for 2026/27 onwards and absent from 2025/26, which is why HMRC's 2025/26 employer tables omit it.
- Student loans are not a tax. They are repayment of a debt that stops once the balance is cleared or written off, and the sums repaid are capped by what was borrowed. They are included in the combined line because at the margin they behave exactly like one — a fixed percentage of income above a threshold, collected through PAYE — but a high earner near the end of their balance may face none of it. Like NI, the deduction is calculated per pay period rather than annually.
- The £100,000 childcare cliff. Tax-Free Childcare is worth up to £2,000 per child a year (children up to 11), and England's funded childcare is 30 hours a week for 38 weeks (ages 9 months to 4). Both are withdrawn in full the moment either parent's adjusted net income exceeds £100,000 — there is no taper. That makes it a step in net income rather than a rate, which is why no line carries it in the two rate views; it is marked there instead, and drawn as the vertical drop in the take-home view.
- Scotland differs. Scotland funds 1,140 hours for all 3 and 4 year olds regardless of parental income or working status, so those hours are not lost at the cliff; only Tax-Free Childcare is, that being UK-wide. The funded-hours loss shown for the rest of the UK is modelled on England's scheme — Wales and Northern Ireland run different schemes that are not modelled here.
- The funded hours have no fixed cash value. Tax-Free Childcare is an exact statutory £2,000; the funded hours are worth whatever you would otherwise have paid, which varies widely by provider and area. That value is yours to set, and the break-even figures move with it, so treat them as an estimate rather than a quoted number. Break-even is solved numerically rather than assumed, because the marginal rate falls at £125,140 partway through the recovery.
- Also not modelled here: the income test applies per parent, so a household can lose everything on one parent's salary while the other earns little; the entitlement is reconfirmed quarterly; and a pension contribution that brings adjusted net income back under £100,000 restores it in full, which is the standard mitigation.
- Universal Credit is the reason the bottom of this chart is not the gentle place it looks. The award falls by 55p for every £1 of net earnings above the work allowance — net meaning after income tax, National Insurance and any pension contribution. Because it bites on what is left rather than on the gross, it compounds with tax instead of adding to it: a basic rate taxpayer keeps 72p of the next pound and then loses 55% of that, giving 20 + 8 + 39.6 = 67.6%. That is a higher rate than the 60% trap, and it applies to some of the lowest earners in the country.
- The work allowance is conditional. It exists only for a household with a child or with limited capability for work; everyone else is tapered from the very first pound of earnings, so the taper can run entirely below the income tax threshold and be finished before any tax is ever paid. Where it does apply, having rent met by the housing element cuts it to the lower of the two rates.
- Student loans make it worse than the arithmetic suggests. Repayments are not deducted before the taper is applied, so a graduate keeps 9% less of the pound but Universal Credit is withdrawn as though they had not paid it. The two stack in full.
- What the two years show. The two-child limit is removed from 6 April 2026, so a third or later child brings a child element for the first time — a larger award, tapered over a longer stretch of salary. From the same date the health element splits in two: an award already in payment, terminal illness or the severe conditions criteria keep the protected rate, while a new award is worth less than half of it. Both are selectable above.
- UC assumptions. The claimant is 25 or over; on a couple claim only one partner earns, though the award and the taper are assessed jointly, so a second earner would exhaust it sooner. Every child is assumed born on or after 6 April 2017 — an eldest child born before it attracts a higher element. The award is annualised to sit on this chart's axis; real Universal Credit is assessed monthly on the earnings actually received in each period and does not average out over a year.
- Not modelled in the UC figures: the childcare element (85% of costs, which cannot be claimed alongside Tax-Free Childcare — so the childcare support plotted here and a UC claim are mutually exclusive in real life), the carer element, capital and savings limits, the benefit cap, surplus earnings, deductions for advances or arrears, and the local housing allowance cap on the housing element. Rent is taken at face value.
- Excluded: pension contributions and salary sacrifice, and dividend and savings income, which use UK-wide rates even in Scotland — those have a tool of their own. Benefits other than Universal Credit and child benefit are not modelled either. Any of these can push the true marginal rate materially higher.
- Gross income is treated as employment income only, all taxable at the rates above.
- Sources. Every figure was checked against the page of the body that sets it, not against commentary. Income tax: HMRC's rates and allowances and the allowance taper; the Scottish Government's rates and bands for 2025/26 and 2026/27. National Insurance, the Employment Allowance and student loan thresholds: HMRC's rates and thresholds for employers, 2025/26 and 2026/27, with the Plan 5 start date from the student loan terms and conditions. Child benefit: HMRC's rates for both years and the high income charge. Childcare: Tax-Free Childcare and its £100,000 income limit, England's 30 hours, and the Scottish Government's 1,140 hours. Universal Credit: DWP's benefit rates for 2025/26 and 2026/27, the 55% taper and work allowance, and the Universal Credit (Removal of Two Child Limit) Act 2026.