This guide explains Income Tax rates and Personal Allowances for citizens living in the United Kingdom. Additional information clarifies how tax bands and thresholds work.
CURRENT TAX RATES: Basic rate payable in England, Wales and Northern Ireland is 20% on taxable income up to £45,000.
The basic rate payable in Scotland is also 20% on taxable income. But the upper threshold is £43,000.
The exact amount of Income Tax due in each tax year varies and usually depends on:
Even so, Income Tax laws apportion some of your earnings as a tax-free amount each tax year. The current tax year started from the 6th of April 2017 and runs through to the 5th of April of 2018.
Each year the government set an amount of income that is not liable for tax. The standard Personal Allowance for the tax year 2017/18 is £11,500.
Personal Allowances can be bigger for some individuals and couples. For example, it will be higher if you claim the Blind Person Allowance or Marriage Allowance. But, it will be lower if you have an income over £100,000.
|Income Tax Band||Taxable Income||Tax Percentage Rate|
|Standard Personal Allowance||Up to £11,500||Non-taxpayer (0%)|
|Basic Rate||Between £11,501 and £45,000||20%|
|Higher Rate||Between £45.001 and £150,000||40%|
|Additional Rate||Above £150,000||45%|
The tax rates table shows how much you pay in each band based on the standard Personal Allowance of £11,500.
Note: There is no Personal Allowance on taxable income over £123,000. Different income tax band rules apply if you live in Scotland.
When you check your Income Tax you will be able to see:
As a rule tax-free allowances apply for both:
Note: Tax is liable on any interest or dividends above your allowance.
In some cases you may qualify to claim Income Tax reliefs. There are some automatic types of tax relief and there are others that you need to apply for.
Some married couples, and those in civil partnerships, can claim the Marriage Tax Allowance. This helps to reduce tax paid by your partner providing your income is lower than the standard Personal Allowance.
There is an alternative to claiming Marriage Allowance if you or your partner were born before the 6th of April 1935. You may get extra tax relief if you qualify to claim Married Couple's Allowance instead.
The standard Personal Allowance was £11,000 during the tax year from 6th of April 2016 to 5th of April 2017.
|Income Tax Rate||Taxable Income above Personal Allowance for the tax year 2016 to 2017|
|Basic Rate 20%||People with a standard Personal Allowance between £0 and £32,000 started paying 20% on income over £11,000|
|Higher Rate 40%||People with a standard Personal Allowance between £32,001 and £150,000 started paying 40% on income over £43,000|
|Additional Rate 45%||Income Above £150,000|
Personal Allowances would have been higher in some case and less if your income was over £100,000. HM Revenue and Customs publish historical tax rate tables for past tax years.
Personal Allowance will go down by £1 for every £2 if the adjusted net income is over 100,000. That means the allowance is zero for those with income from £123,000. In this case you should also fill in a Self Assessment tax return.
Register before the 5th of October in the tax year following when you had the income if you do not usually send in a tax return. HMRC will send you a letter informing you of the next steps after you register.
Income Tax Rates and Personal Allowances in the United Kingdom