What Is the 40% Tax Bracket?

The 40% tax bracket is the UK’s higher-rate income tax band. For 2024/25, it applies to income between £50,271 and £125,140.

But here’s the catch: many people in this bracket overpay without realising, often because they think all their income gets taxed at 40%. In reality, only the portion above £50,271 is taxed at that rate.

Understanding how it works could save you thousands. And if you’re already in that bracket or heading towards it, there’s a good chance HMRC owes you money.

What is the 40% tax bracket in the UK?

The 40% tax bracket applies to higher-rate taxpayers in the UK. That’s anyone with a taxable income between £50,271 and £125,140 in the 2024/25 tax year.

These income tax rates show how your income is taxed at each level:

20% on income between £12,571 and £50,270 (basic rate)
40% on income between £50,271 and £125,140 (higher rate)
45% on income over £125,140 (additional rate)

The higher-rate threshold can catch people out, especially those who get a bonus, pay rise or start earning extra through side work.

What about Scotland?

If you live in Scotland, income tax bands are a little different. The 40% band there is called the Higher Rate, but it starts at a lower income level. As of 2024/25, Scottish taxpayers hit 42% at £43,663. So if you live north of the border, you could be paying more tax on less income.

How UK tax brackets actually work

The UK’s progressive tax system means your income is split into chunks, and each chunk is taxed at a different rate – not all at once. This often causes confusion when people enter the 40% tax bracket. You don’t pay 40% on everything you earn, just the part above £50,271.

Let’s break it down with two examples:

Example 1: £55,000 salary

First £12,570: tax-free (Personal Allowance)
£12,571–£50,270: taxed at 20% = £7,539.80
£50,271–£55,000: taxed at 40% = £1,892

Total income tax = £9,431.80

Example 2: £65,000 salary

First £12,570: tax-free
£12,571–£50,270: taxed at 20% = £7,539.80
£50,271–£65,000: taxed at 40% = £5,892

Total income tax = £13,431.80

You’re never worse off for earning more. That myth – “I don’t want a pay rise because I’ll lose money to tax” – doesn’t hold up. You’ll always take home more overall, even if a chunk is taxed at a higher rate.

Who pays the 40% rate?

You don’t have to be a millionaire to enter the 40% tax bracket. In fact, more and more people are finding themselves classed as a higher-rate taxpayer, often without realising it.

Typical higher-rate earners

Jobs like senior nurses, engineers, teachers with management roles, IT professionals, and police inspectors often fall into this range – especially when overtime, bonuses or shift allowances stack up.

But it’s not just full-time salaried workers. You might also pay 40% tax if:

You work part-time across multiple roles and your combined taxable income goes over £50,271.
You’ve had a bonus, commission, or one-off income that tips you over the threshold.
You run a side hustle on top of your main job.
Fast career growth like a pay rise or promotion can push you into the higher-rate band quickly

Being in this bracket means you’re earning well. But it also raises your risk of paying too much tax.

What income counts toward the 40% bracket?

When HMRC works out if you’re in the 40% tax bracket, they look at your total taxable income, not just your salary. That means a lot of different income sources can push you into higher-rate territory, sometimes without you noticing.

Here’s what counts:

Salary and wages – your main job and any additional employment
Bonuses and commission – performance-based or one-off pay
Benefits in kind – company car, private healthcare
Rental income – from any properties you let out
Investment gains – dividends, some capital gains
Side hustles and freelance work – any extra income outside your main job

Even if each of these on its own wouldn’t trigger higher-rate tax, combined they can easily push you over the threshold. That’s why people with multiple income streams often end up overpaying tax, especially if their tax codes haven’t been updated properly.

The hidden costs of being a 40% taxpayer

Once you cross certain income thresholds, the costs start stacking up in ways that aren’t always obvious. Here’s where things get tricky.

Reduced Personal Allowance

Once your taxable income hits £100,000, your Personal Allowance (the first £12,570 you don’t pay tax on) starts to shrink. It disappears entirely at £125,140. That creates an effective 60% tax rate on income between £100,000 and £125,140.

That’s not a typo. Earn just a little over £100k and the extra tax can bite hard.

High Income Child Benefit Charge

If you or your partner claim Child Benefit and one of you earns over £50,000, you may have to pay back some or all of it through a High Income Child Benefit Charge. It tapers up to 100% repayment once you earn £60,000.

Savings interest and tax-free limits

Higher-rate taxpayers get a smaller Personal Savings Allowance – just £500, compared to £1,000 for basic-rate taxpayers. That means more of your interest income is likely to be taxed.

Student loan implications

Add a Plan 2 student loan and your marginal rate hits 49% – even before National Insurance.

Legitimate ways to reduce your 40% tax bill

Being in the 40% tax bracket doesn’t mean you’re stuck with a huge bill. There are perfectly legal ways to bring down your taxable income and keep more of what you earn.

Pension contributions

Putting money into your pension is one of the most effective ways to reduce your tax bill. You get tax relief at your highest rate. For higher-rate taxpayers, that’s 40%.
You can:

Contribute up to £60,000 per year (or 100% of your income, whichever is lower) and still get relief.
Use salary sacrifice schemes through your employer to cut your tax and National Insurance.
Lower your taxable income below the £50,271 threshold to stay out of the higher bracket altogether.

Work expenses you can claim

You might be entitled to tax relief on a range of work-related costs, especially if you:

Pay for professional fees, tools, or subscriptions
Travel between work locations (not commuting)
Work-from-home utility costs

Many higher-rate taxpayers never claim these, which often means they’re paying too much tax year after year.

Other UK tax reliefs

Gift Aid: Charitable donations can extend your basic-rate band, lowering your overall tax
Marriage Allowance: If your spouse or civil partner earns less than the Personal Allowance, you could get a tax break
Blind Person’s Allowance: An extra allowance for those who qualify

These small wins add up. And in some cases, they can take you out of the 40% tax band entirely.

Common 40% tax bracket mistakes

Once you're in the 40% tax bracket, it’s easy to slip up. Here are some of the most common issues we see at RIFT:

Not claiming work expenses – Travel, tools, fees and more could be tax-deductible, but many higher-rate taxpayers don’t realise what they’re allowed to claim.
Missing pension opportunities – Not using pension contributions to reduce taxable income and lower your overall bill.
Ignoring the Personal Allowance taper – Earning over £100k? Your allowance is shrinking and that could land you in the dreaded 60% effective tax zone.
Paying emergency tax on bonuses – A big bonus can trigger the wrong tax code, meaning you pay too much up front.
Not understanding tax codes across multiple jobs – More than one income source? Your tax might not be split correctly, especially if HMRC hasn’t been updated.
Redundancy payments overtaxed – If you’ve been made redundant recently, your payout might’ve been taxed incorrectly.

Emergency tax and the 40% bracket

If you’ve recently started a new job or received a large bonus, there’s a good chance you’ve been hit with emergency tax.

Why it happens

Emergency tax kicks in when HMRC doesn’t have the right information about your income. Instead of waiting, they play it safe and assume the worst, taxing you as if you’ll earn the same high amount every month.

That’s especially harsh for higher earners, where a Month 1 basis tax code (like 1257L M1) doesn’t take your full tax year into account. It treats each month like it’s the first, ignoring what you’ve paid or earned before.

Common triggers:

Changing jobs
Going from self-employed to employed
Receiving a one-off bonus or commission
Missing or incorrect P45s

How to fix it

The good news? You can claim a refund. Once your employer or HMRC updates your tax code and income details, any overpaid tax should be returned either through your payslip, or by submitting a claim.

At RIFT, we help people spot and recover emergency tax all the time, especially when bonuses or multiple jobs are involved.

Why you might be overpaying tax as a higher-rate taxpayer

Higher earners often get taxed more than they should. Not because they earn more, but because their situation is more complex. Common reasons include:

New job with the wrong tax code
Bonuses or commission taxed too heavily
Multiple income sources not coded correctly
Unclaimed work expenses like tools, travel or training
Missed reliefs for professional fees or pensions

Higher earners overpay the most – don’t be one of them

If you’re in the 40% tax bracket, there’s a good chance HMRC owes you money. Work travel, fees, equipment – if you’ve paid out of pocket, you might’ve paid too much tax.
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