Glossary · UK
What is Basic Rate Limit?
The £37,700 band of taxable income (above the Personal Allowance) taxed at the 20% basic rate in England, Wales and Northern Ireland for 2026/27.
Full Definition
The Basic Rate Limit is the width of the band of taxable income, sitting immediately above the tax-free Personal Allowance, that is taxed at the 20% basic rate of Income Tax in England, Wales and Northern Ireland. For 2026/27 the Basic Rate Limit is £37,700, meaning that after the first £12,570 of income is covered by the Personal Allowance, the next £37,700 of taxable income (taking total income up to £50,270) is taxed at 20%; income above £50,270 moves into the 40% higher rate. The Basic Rate Limit has been frozen at this level for several tax years as part of a wider freeze on income tax thresholds, which — combined with wage growth — has pulled a growing number of taxpayers into the higher rate band through 'fiscal drag' even without any change to the headline tax rates. Scotland sets its own income tax bands and rates separately from the rest of the UK, so the equivalent Scottish basic rate band differs.
How Basic Rate Limit is calculated
Higher rate threshold = Personal Allowance + Basic Rate Limit- 12570
- Personal Allowance for 2026/27 (GBP).
- 37700
- Basic Rate Limit for 2026/27 (GBP) -- width of the 20% band above the allowance.
Worked example: Adding the Personal Allowance (GBP 12,570) to the Basic Rate Limit (GBP 37,700) gives GBP 50,270 -- the point at which income moves from the 20% basic rate into the 40% higher rate (rUK) for 2026/27.