Income Tax
How income tax is worked out in the United Kingdom
Progressive tax bands
Income tax in the UK is charged in slices. The first slice, your Personal Allowance, is tax free. Each slice after that is taxed at its own rate, so a pay rise is only taxed at the higher rate on the part that falls into the higher slice. National Insurance and any student loan repayment are separate deductions and are not shown here.
England, Wales and Northern Irelandi
| Income | Tax liability | Tax rate |
|---|---|---|
| £0 - £12,570i | Nil | 0% |
| £12,571 - £50,270i | 20p for every £1 over £12,570 | 20% |
| £50,271 - £125,140i | £7,540 plus 40p for every £1 over £50,270 | 40% 60% from £100,000 to £125,140 |
| Over £125,140i | £42,516 plus 45p for every £1 over £125,140 | 45% |
Between £100,000 and £125,140 the Personal Allowance is withdrawn as you earn more, so the effective rate on each extra pound is 60%.
Personal Allowance and the 60% zone
Most people can earn up to the Personal Allowance before paying income tax. Once your income passes the taper limit the allowance shrinks as you earn more, until it reaches nil. On the way down every extra pound is taxed at the higher rate and also costs you allowance, so the effective rate is well above the headline rate. The chart marks that range and the table shows the figure.
Income over £100,000 on GOV.UKScotland
Scottish taxpayers pay income tax on their earnings and pension income at rates set by the Scottish Parliament, with 6 bands instead of 3. Your tax code starts with S if you are one. The Personal Allowance is the same as in the rest of the UK, and National Insurance is the same everywhere.
Scottish Income Tax on GOV.UKNon-residents
If you do not count as a UK resident for the year you may not be entitled to a Personal Allowance, so tax starts from the first pound. Some people, such as citizens of certain countries, keep their allowance. The table above shows the case with no allowance.
Tax on UK income if you live abroadEmergency tax codes
If your employer does not have your details, they put you on an emergency code until HMRC sends the right one. The usual code taxes each pay day separately (a week 1 or month 1 basis), so a month with a bonus can see more tax taken than later months. Any overpayment is normally put right through your pay or a refund once HMRC has the facts.
Tax codes on GOV.UK