Higher Rate Taxpayer
UK tax glossary · Last reviewed: April 2026
You become a higher-rate taxpayer when your taxable income exceeds £50,270 (2026/27). Only income above this threshold is taxed at 40% — lower slices still attract the basic rate of 20%.
Being a higher-rate taxpayer has cascading effects: your dividend tax rate rises to 33.75%, your savings allowance halves to £500, and you can claim additional Gift Aid and pension relief. The Personal Savings Allowance is also halved at this level.
Scottish higher-rate taxpayers pay 42% above their higher-rate threshold (which differs from the rest of the UK). Always check whether Scottish rates apply to you based on your home address.
Common questions
How much of my income is taxed at 40%?
Only the portion above £50,270. For example, on a £60,000 salary, £9,730 sits in the higher-rate band and is taxed at 40%. The rest is taxed at 20% (or is tax-free under the Personal Allowance).
Can I reduce my income to avoid higher-rate tax?
Yes. Pension contributions, Gift Aid donations, and salary sacrifice all reduce taxable income. For every £1 contributed to a pension by a higher-rate taxpayer, HMRC effectively refunds 40p in tax.
Related resources
TaxHelper provides general information based on published HMRC rates and guidance. It is not regulated financial or tax advice. For decisions involving significant sums, complex circumstances, or if you are unsure, speak to a qualified accountant or HMRC directly.