Most people think of tax as what comes off their payslip. But income tax and National Insurance are only the start. When you spend your take-home pay, VAT takes another slice. When your savings earn interest, you pay income tax on that too. When you buy a home, stamp duty applies. And when you die, inheritance tax can take 40% of what's left. This page shows the full picture — every layer of taxation — for four typical income levels.
⚠️ Illustrative figures for a single England-resident employee with no pension contributions, no benefits, standard ISA savings only. Not financial or tax advice. Individual circumstances vary significantly. Consult a qualified tax adviser.
🔗 New — Income Cliff Edges explained in full: Earning £100,001 instead of £99,999 can cost you £11,000+ in lost childcare, a 60% marginal tax rate, AND lost child benefit. We've built a dedicated page showing all six traps, the real marginal rates at every income level, and what pension contributions can do about it. See the full cliff edges breakdown →
🚨 The £100,000 shock: Notice that the £100,000 earner pays a higher total direct tax rate than the £80,000 earner, despite "only" earning 25% more. This is the 60% marginal rate trap in action — between £100,000 and £125,140, the loss of personal allowance creates an effective income tax rate of 60%. Combined with NI, the marginal rate is 62%. This is why many professionals at this level try to reduce their taxable income through pension contributions — which remain one of the most tax-efficient strategies available.
⚠️ The death duty shock at £250,000: The lifetime tax burden on a £250,000 earner looks substantial — but the inheritance tax calculation assumes a modestly sized estate. In practice, many people in this income bracket accumulate significantly more wealth, meaning the IHT bill at death could be far higher. The IHT figures shown assume an estate of £1.2m (approximately what a high earner in London might accumulate over a career, including property) with the standard nil-rate band and residence allowance. Individual estates vary enormously.
📋 What this doesn't include (but should): Employer NI (13.8% on earnings above £5,100) is paid by your employer — it doesn't appear on your payslip, but it is part of the total cost of employing you and represents money your employer could theoretically pay you instead. Fuel duty (66.5p per litre before VAT). Council Tax. Stamp duty on property purchases. Vehicle excise duty. Insurance premium tax (12%). Air passenger duty. If all of these were included, the total government take would be materially higher — particularly for homeowners and car owners.
Sources: HMRC Income Tax rates 2026-27 — personal allowance £12,570; basic rate 20% on £12,571-£50,270; higher rate 40% on £50,271-£125,140; additional rate 45% above £125,140; personal allowance taper £100k-£125,140. HMRC National Insurance 2026-27 — employee: 12% on £12,570-£50,270; 2% above £50,270. HMRC VAT rate 20% standard rate. HMRC savings interest — Personal Savings Allowance: basic rate £1,000/year; higher rate £500/year; additional rate £0 — interest above these amounts taxed at marginal income tax rate. HMRC ISA limit £20,000/year, interest tax-free. HMRC Inheritance Tax — nil-rate band £325,000; residence nil-rate band £175,000 (for own home left to direct descendants); 40% on remainder. OBR IHT projections. All figures 2026-27 tax year England. Scotland and Wales have some differing rates. Figures are approximate for illustrative purposes for a single, standard employed person. Consult a qualified tax adviser for personal advice.