UK taxes compared How income tax rates have changed

Income tax is the biggest source of government revenue, generating £152bn last year. It's paid by 30 million people- of whom 24.8 million are basic-rate taxpayers and 4 million are higher-rate taxpayers. 
Income tax rates

There are currently three main rates of income tax:

  • Basic rate - 20%
  • Higher rate - 40%
  • Additional rate - 45%

Income tax is charged after your personal allowance (the amount of income you can keep tax-free). This can differ for individuals depending on their circumstances.

Personal allowance 

While personal allowance rose fairly steadily in the 1990s and between 2000 and 2010, it has increased more sharply under the current Coalition government from:

  • £6,475 in 2010/11
  • £8,105 in 2012/13
  • £9,440 in 2013/14. 
  • £10,000 in 2014/15

Basic rate tax

The basic rate has fallen steadily over recent years. 

  • In 1975/76 it was 35% 
  • In 1979/80 it was 30%
  • In 1988/89 it was 25%
  • In 2000/01 it was 22%.

The current rate of 20% was introduced in 2008/09.

Higher rate tax

Higher rate tax was set at 40% in 1988/89 and has remained at this rate ever since.

Additional rate tax

Additional rate tax was introduced in 2010/11 at 50%. It echoed an earlier top rate of tax that existed before 1988-9. 

This was a high as 83% in 1974/75, but fell to 60% in 1979/80. 

In 2013/14 the top rate of tax was cut to 45%.

Who pays the most tax?

According to HMRC, 56% of all income tax in 2012/13 was paid by the top 10% of income tax payers, and 27% by just by the top 1%.

The threshold at which different rates of tax are applied have also varied over time. In recent years 40% tax has become payable at reduced levels of income - falling from £37,400 in 2009/10 to £34,370 in 2012/13. 

For 2013/14, 40% tax is payable on taxable income above £32,010 and 45% tax on income above £150,000.    

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