Glossary · UK
What is Effective Tax Rate?
Total tax paid expressed as a percentage of total gross income — your real average rate.
Full Definition
The effective tax rate (ETR) is total UK Income Tax (and often NI and student loan combined) divided by gross income. It is always lower than your marginal rate because the first £12,570 of income in 2025/26 is tax-free under the Personal Allowance, and the next £37,700 is taxed at only 20%. For example, an employee on £50,000 pays roughly £7,486 income tax and £3,794 employee NI in 2025/26 — an ETR of about 22.6%, even though the marginal rate at the top of that salary is 42%. ETR is the right figure to use when comparing offers, regions (Scotland vs rUK) or when describing real take-home pay.
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Disclaimer: Definitions are for guidance only. For decisions about your tax, savings, property or pension situation, always consult a qualified professional or refer to gov.uk.