UK Income Tax Bands

Does knowing the UK income tax bands confuse you? To help you better understand, I’ve laid out income tax bands and the current thresholds in this short guide. Plus, I’ve added examples of how much tax an individual would pay depending on their income. Read on to find out more.

Updated 19 October 2021

1. What are the UK Income Tax Bands?

The UK income tax bands determine how much a UK individual pays in income tax. The general rule is that the more taxable income you earn, the more tax you pay. The amount of tax payable is based on a percentage amount for each income tax band. Understanding how this works is important so you know how income tax thresholds in the UK works.

Here are the UK income tax bands for the current tax year:

 2022/20232021/2022
Personal allowance 0%£12,570£12,570
Basic rate 20%£12,570 to £50,270£12,570 to £50,270
Higher rate 40%£50,271 to £150,000£50,271 to £150,000
Additional rate 45%over £150,000over £150,000

2. When Do the Income Tax Bands Change?

The UK income tax bands change each tax year (6 April to 5 April). Generally, changes are announced as part of the government’s Autumn Budget. Want to know more? You can read about the upcoming changes to the income tax bands and National Insurance bands for the 2022/2023 tax year in this guide.

income tax rates 2022 2023
Income Tax Bands

3. Example of Using Income Tax Bands to Calculate Income Tax Payable

Penny receives a salary of £30,000 per year from her employer. Therefore, she will pay income tax for 2021/2022 of £3,486. This can be worked out using the income tax bands as follows:

  • On the first £12,570 0%
  • On the next £17,430 20% = £3,486

Since Penny is paid under the rules of PAYE, she will also pay Class 1 National Insurance on her earnings. However, this is worked out separately. Her employer will calculate all her tax and National Insurance on her behalf. They also issue a payslip with details of deductions made and the amount left over to be paid into her bank account. Her employer will know how much tax to deduct because HMRC will send them her tax code. They will apply this to her payments and help them understand how much personal allowance she should receive.

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Friendly Disclaimer: Whilst I am an accountant, I’m not your accountant. The information in this article is legally correct but it is for guidance and information purposes only. Everyone’s situation is different and unique so you’ll need to use your own best judgement when applying the advice that I give to your situation. If you are unsure or have a question be sure to contact a qualified professional because mistakes can result in penalties.

About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek, money nerd and creator of www.goselfemployed.co - a website full of templates, guides and resources for UK sole traders. No faff. No confusion. Just simple straightforward advice on business registration, taxes and bookkeeping.