The Income Tax Bands for 2018/2019 in the UK are set as:
|Band||Taxable Income||Tax rate|
|Personal Allowance||Up to £11,850||0%|
|Basic rate||£11,851 to £46,350||20%|
|Higher rate||£46,351 to £150,000||40%|
|Additional rate||over £150,000||45%|
What is the Personal Allowance
The personal allowance is the amount everyone in the UK is allowed to earn tax free. It changes every year and this is announced as part of the Governments Autumn Budget.
What is Taxable Income
How to Use the Income Tax Bands 2018/2019
Louise receives a salary of £30,000 per year from her employer. She will therefore pay income tax for 2018/2019 of £3,630.
This can be worked out using the income tax bands in the table above:
On the first £11,850 0%
On the next £18,150 20% = £3,630
Louise will also pay Class 1 National Insurance on her earnings and this is worked out separately.