Income tax explained Income tax bands: how much will you pay?
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
- 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 £31,865||Over £31,785|
|Additional rate income tax (45%)||Over £150,000||Over £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 )||£10,500||N/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 1935||N/A||N/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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