April 2025 marks the start of the 2025/26 tax year. While headline rates stay largely the same, frozen thresholds and employer NI changes mean most workers will pay more — often without realising it.
Here's a clear breakdown of every change and what it means for your pay. For the 2026/27 picture, see our UK tax changes 2026/27 guide. For how salary sacrifice counters frozen thresholds, see our salary sacrifice explained guide.
See your 2025/26 take-home pay
Update your salary in the calculator for an instant 2025/26 breakdown.
Income tax thresholds — still frozen
The Personal Allowance and higher rate threshold remain frozen until at least April 2028.
| Threshold | 2024/25 | 2025/26 |
|---|---|---|
| Personal Allowance | £12,570 | £12,570 |
| Basic rate (20%) up to | £50,270 | £50,270 |
| Higher rate (40%) up to | £125,140 | £125,140 |
| Additional rate (45%) above | £125,140 | £125,140 |
With average wages rising, more people are being pulled into higher tax bands each year — a process known as fiscal drag. HMRC estimates over 1 million additional taxpayers have been dragged into the higher rate band since 2021.
Salary sacrifice is the most effective way to fight fiscal drag. Sacrificing enough to stay below £50,270 keeps you in the basic rate band regardless of pay rises.
Employer National Insurance — significant rise
The biggest change in 2025/26 is for employers, not employees. From April 2025:
| 2024/25 | 2025/26 | |
|---|---|---|
| Employer NI rate | 13.8% | 15% |
| Secondary threshold | £9,100/year | £5,000/year |
Employers now pay NI on earnings above £5,000 (down from £9,100) at a higher 15% rate. This significantly increases the cost of employment — and makes salary sacrifice even more attractive for employers, as it reduces the payroll they pay NI on.
If your employer hasn't already, now is the time to ask whether they pass their NI savings from salary sacrifice back into your pension. At 15%, the saving on a £5,000 sacrifice is £750/year.
Employee NI — unchanged
Employee NI rates remain the same for 2025/26:
| Band | Rate |
|---|---|
| Earnings up to £12,570 | 0% |
| £12,570 – £50,270 | 8% |
| Above £50,270 | 2% |
Scottish income tax — updated bands
Scottish taxpayers have separate rates and bands. For 2025/26:
| Band | Rate | Income |
|---|---|---|
| Starter | 19% | £12,571 – £15,397 |
| Basic | 20% | £15,398 – £27,491 |
| Intermediate | 21% | £27,492 – £43,662 |
| Higher | 42% | £43,663 – £75,000 |
| Advanced | 45% | £75,001 – £125,140 |
| Top | 48% | Above £125,140 |
Scottish higher rate taxpayers face a 42% marginal rate — significantly above the 40% rate in the rest of the UK. Salary sacrifice is especially valuable for Scottish earners between £43,663 and £75,000.
Child Benefit thresholds — improved
The High Income Child Benefit Charge (HICBC) thresholds were updated in April 2024 and remain for 2025/26:
| Old | 2025/26 | |
|---|---|---|
| Charge starts | £50,000 | £60,000 |
| Full repayment | £60,000 | £80,000 |
If your Adjusted Net Income is between £60,000 and £80,000 and you receive Child Benefit, salary sacrifice can reduce your ANI and cut or eliminate the charge.
What this means for you
If you earn £50,000 and received a pay rise this year, frozen thresholds mean around £200 of that rise goes to HMRC in extra income tax. Salary sacrifice keeps your taxable income lower and fights fiscal drag directly.
At £60,000, the employer NI change is significant: your employer now saves £750 on a £5,000 salary sacrifice (at the new 15% rate, up from £690). If they pass this back, your pension receives an extra £750 at no cost to you.
For Scottish taxpayers at £48,000, the 42% higher rate band makes salary sacrifice worth 44p per £1 sacrificed — significantly more than the 28p saved by a basic rate taxpayer in England.
What you should do now
- Check your tax code — frozen thresholds mean codes can drift. Verify yours at gov.uk
- Review your pension sacrifice — employer NI savings are higher; ask HR if they're passing them on
- Model your 2025/26 take-home — use the calculator below with your updated salary
- Scottish taxpayers — check whether you've crossed the £43,663 higher rate threshold
Try the TaxCal UK calculator to estimate your take-home pay.
FAQ
Did employer NI change in April 2025?
Yes. The employer NI rate rose from 13.8% to 15% and the secondary threshold dropped from £9,100 to £5,000. This significantly increased the cost of employment and made salary sacrifice more attractive for employers.
Are income tax rates changing in 2025/26?
No. The headline rates (20%, 40%, 45%) are unchanged. The impact comes from frozen thresholds pulling more income into higher bands as wages rise.
How does fiscal drag affect me?
If your salary rises but the Personal Allowance and higher rate threshold stay frozen, more of your income becomes taxable each year. Salary sacrifice is the most direct way to counteract this.
Is the Child Benefit threshold still £60,000 in 2025/26?
Yes. The threshold was raised from £50,000 to £60,000 in April 2024 and remains at £60,000 for 2025/26.
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