Understand how the UK tax brackets work in England and Scotland for the 2024/25 tax year and how you pay income tax on your taxable income across the different tax bands (including if you’re self-employed).
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.
Table of Contents
UK Tax Brackets 2024
Here are the current income tax bands in England and Scotland for the 2024-25 tax year:
| England & Wales | Scotland |
|---|---|
| 0%: £0 to £12,570 (personal allowance) | 0%: £0 to £12,570 (personal allowance) |
| 20%: £12,571 to £50,270 (basic rate) | 19%: £12,571 to £14,876 (starter rate) |
| 40%: £50,271 to £100,000 (higher rate) | 20%: £14,877 to £26,561 (basic rate) |
| 60%: £100,001 to £125,139 (higher rate + personal allowance restriction) | 21%: £26,562 to £43,662 (intermediate rate) |
| 45%: Over £125,140 (additional rate) | 42%: £43,663 to £75,000 (higher rate) |
| 45%: £75,001 to £100,000 (advanced rate) | |
| 63%: £100,001 to £125,140 (higher rate + personal allowance restriction) | |
| 48%: Over £125,141 (top rate) |
The personal allowance is clawed back for anyone who earns over £100,000 (this is known as the personal allowance restriction).
It is restricted by £1 for every £2 of your income over £100,000 – the clawback of personal allowance results in a 60% tax rate in England and 63% in Scotland. That means once earnings reach £125,140, all personal allowance is lost.
How Do Income Tax Bands Work?
The more you earn, the more income tax you pay. But it’s on a sliding scale, so you’ll pay different rates depending on the portion of your income that falls into each tax band.
In summary, in the UK the rate you’ll pay can be worked out like this:
| Income Tax Band | Income Tax Rate |
|---|---|
| on the first £12,570 of taxable income | 0% |
| on the next £37,700 | 20% |
| on the next £49,730 | 40% |
| on the next £25,140 | 60% |
| anything over £150,000 | 45% |
Here’s an example:
Carlos lives in the UK and earns a taxable income of £40,000 for the 2024-25 tax year. He will pay income tax of £5,486 calculated as:
- On the first £12,570 0% = £0
- On the next £27,430 20% = £5,486
Income tax is paid on taxable income – some types of income and benefits are tax-free.
Read=> What Counts as Taxable Income in the UK?
Read=> What State Benefits are Taxable?
How Income Tax Bands Work for the Self Employed
The same UK tax brackets above apply if you are self-employed but the amount of income tax you’ll pay is based on your business profits.
If you’re employed and self-employed, you’ll pay income tax based on your combined income – the income tax bracket you’ll fall into will be based on the combined income from your payslip and taxable profits.
You’ll also pay class 4 national insurance on your business profits as well and have the option to pay class 2 national insurance voluntarily to protect your access to state benefits.
Here’s an example:
Penny lives in London and is employed and self-employed. For the tax year 2023-24, she earns a gross salary of £40,000 in her job and her business profits are £20,000 so her total taxable income is £60,000. Her income above the personal allowance falls into the basic rate and higher rate tax bands meaning her total tax bill is £11,432 calculated as follows:
- On the first £12,570 0% = £0
- On the next £37,699 20% = £7,540
- On the final £9,731 40% = £3,892
Since Penny is paid under the rules of PAYE, she will also pay Class 1 national insurance on her salary income. However, this is worked out separately by her employer who will issue a payslip with details of deductions made using her tax code. As she has a side hustle, she will also need to pay class 4 national insurance on her business profits.
Read=> Self Employed Tax: An Easy Guide for Beginners (2024)
Read=> Tax When You’re Employed and Self-Employed
If you are self-employed or a side hustler, you can also claim the tax-free trading income allowance of £1,000 in addition to the personal allowance of £12,570.
FAQs
What is Income Tax in the UK?
Income tax is a type of tax you pay in the UK on your taxable income.
Not all types of income are taxable and you can claim income tax allowances and reliefs to reduce the amount of income tax you pay.
Income tax is one type of tax in the UK. Depending on the type of income you’ve received, you may need to pay alternative or additional types of tax such as:
Capital gains tax
Dividend tax
National insurance
Inheritance Tax
Is all Taxable Income Taxed at the Same Rate?
You may pay different tax rates depending on your total taxable income. You could pay tax at the basic rate, higher rate and additional rate tax brackets, depending on your total earnings for the tax year.
Want to Read More About Self Employed Tax?
If you’ve enjoyed this post you may like to read more about self employed tax. Here are some of my most popular blog posts on this topic…
- How is National Insurance Calculated? (+ NIC Rates for 2023)
- Self Employed Tax: An Easy Guide for Beginners (2024)
- The UK 60% Tax Trap Explained (63% in Scotland)
- Claiming Self-Employed Expenses
- 1257l Tax Code: Everything You Need to Know (And Check For)
Any Questions?
I’d love to help if you have any questions about this topic. Feel free to ask over in my group ‘The Self-Employed Club‘.
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