Income tax explained Income tax bands: how much will you pay?


Tax rates differ according to how high your total income is. 

Tax is charged at different rates on taxable income within set bands. Although tax rates don’t change very frequently, the threshold for each band varies annually.

This guide explains the different tax bands and helps you calculate how much income tax you'll pay. 

Tax band thresholds

In 2015-16

  • Basic rate tax is charged at 20% on taxable income (income which exceeds your personal allowance) above £31,785
  • Anything above this is taxed at the higher rate of 40%
  • Taxable income above £150,000 will be taxed at the additional rate of 45%.

10% savings interest tax band

Although 20% is the basic rate of income tax, a lower 10% tax band exists for savings interest received during 2014-15. 

This only applies in cases where non-savings income, minus your personal allowance, is less than £2,880 in 2014-15. 

Savings interest that takes your total taxable income up to this threshold is taxed at 10%. Additional savings interest is taxable at 20%.  

From April 2015, the 10% tax band is replaced with a £5,000 tax-free savings band. 

Go further: Tax on savings - learn how savings interest and dividends are taxed 

Tax basics explained
Basic rate income tax (20%)£0-£31,865 (after allowances)£0-£31,785 (after allowances)
Higher rate income tax (40%)Over £31,865Over £31,785
Additional rate income tax (45%)Over £150,000Over £150,000
Personal allowance (tax-free)£10,000 (unless income above £100,000)£10,600 (unless income above £100,000)
Income limit above which you start to lose personal allowance (at rate of £1 for each £2 you earn above limit)£100,000£100,000
Age-related personal allowance (born before 6 April 1948 )£10,500N/A
Age-related personal allowance (born before 6 April 1938)£10,660£10,660
Lower earnings limit (above which you start to lose age-related allowance)£27,000£27,700
Upper earnings limit (above which you receive no age-related allowance, just basic personal allowance)£28,000£27,820
77+ Upper earnings limit (above which you receive no age-related allowance, just basic personal allowance)£28,320£27,820
Married couple’s allowance (MCA) -born after 6 April 1935N/AN/A
Married couple’s allowance (MCA) -born before 6 April 1935 only£8,165£8,355
Blind person's allowance£2,230£2,290
Capital gains tax (CGT) threshold£11,000£11,100
Inheritance tax threshold (IHT)£325,000£325,000

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