Income Tax rates and Personal Allowances

 1.Current rates and allowances

How much Income Tax you pay in each tax year depends on:

  • how much of your income is above your Personal Allowance
  • how much of your income falls within each tax band

Some income is tax-free.

The current tax year is from 6 April 2021 to 5 April 2022.

Your tax-free Personal Allowance

The standard Personal Allowance is £12,570, which is the amount of income you do not have to pay tax on.

Your Personal Allowance may be bigger if you claim Marriage allowance or Blind Person`s Allowance .It’s smaller if your income is over £100,000.

Income Tax rates and bands

The table shows the tax rates you pay in each band if you have a standard Personal Allowance of £12,570.

Income tax bands are different if you live in Scotland.

Band Taxable income Tax rate
Personal Allowance Up to £12,570 0%
Basic rate £12,571 to £50,270 20%
Higher rate £50,271 to £150,000 40%
Additional rate over £150,000 45%

You do not get a Personal Allowance on taxable income over £125,140.

If you’re employed or get a pension

Check your Income Tax to see:

  • your Personal Allowance and tax code
  • how much tax you’ve paid in the current tax year
  • how much you’re likely to pay for the rest of the year

Other allowances

You have tax-free allowances for:

You may also have tax-free allowances for:

Find out whether you’re eligible for the trading and property allowances.

You pay tax on any interest, dividends or income over your allowances.

Paying less Income Tax

You may be able to claim Income Tax reliefs if you’re eligible for them.

If you’re married or in a civil partnership

You may be able to claim Marriage Allowance to reduce your partner’s tax if your income is less than the standard Personal Allowance.

If you do not claim Marriage Allowance and you or your partner were born before 6 April 1935, you may be able to claim Married Couple’s Allowance.

2. Previous tax years

The standard Personal Allowance from 6 April 2020 to 5 April 2021 was £12,500.

Tax rate Taxable income above your Personal Allowance for 2020 to 2021
Basic rate 20% £0 to £37,500
People with the standard Personal Allowance started paying this rate on income over £12,500
Higher rate 40% £37,501 to £150,000
People with the standard Personal Allowance started paying this rate on income over £50,000
Additional rate 45% Over £150,000

ExampleYou had £35,000 of taxable income and you got the standard Personal Allowance of £12,500. You paid basic rate tax at 20% on £22,500 (£35,000 minus £12,500).

Your Personal Allowance would have been smaller if your income was over £100,000, or bigger if you got Marriage Allowance or Blind Person’s Allowance.

Other rates and earlier tax years

HM Revenue and Customs (HMRC) publishes tables with full rates and allowances for current and past tax years.

3. Income over £100,000

Your Personal Allowance goes down by £1 for every £2 that your adjusted net income is above £100,000. This means your allowance is zero if your income is £125,140 or above.

You’ll also need to do a Self Assessment tax return.

 

 

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