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UK Tax Slabs: Understanding the System

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UK Tax Slabs: Understanding the System

UK Tax Slabs: Understanding the System

What Are Tax Slabs?

Tax slabs, or tax bands, are ranges of income that are taxed at specific rates. The UK operates a progressive tax system—this means the more you earn, the higher the rate of tax you pay on the additional income.

UK Income Tax Bands for the 2024/25 Tax Year

Here’s a breakdown of the income tax bands for England, Wales, and Northern Ireland (Scotland has different bands for income tax):

Band Taxable Income Tax Rate
Personal Allowance Up to £12,570 0% (tax-free)
Basic Rate £12,571 – £50,270 20%
Higher Rate £50,271 – £125,140 40%
Additional Rate Over £125,140 45%

Note: The personal allowance gradually reduces if your income exceeds £100,000 and disappears entirely at £125,140.

Example: How It Works in Practice

Let’s say your annual income is £70,000.

  • The first £12,570 is tax-free (Personal Allowance).

  • The next £37,700 (from £12,571 to £50,270) is taxed at 20% = £7,540.

  • The remaining £19,730 (from £50,271 to £70,000) is taxed at 40% = £7,892.

Total Income Tax = £7,540 + £7,892 = £15,432

You’re not taxed at 40% on your entire income—only on the portion that falls within the higher tax bracket.

National Insurance Contributions (NICs)

Don’t forget about NICs. If you're employed or self-employed, you’ll also pay National Insurance. For employees:

  • 0% on earnings up to £12,570

  • 10% on earnings between £12,571 and £50,270

  • 2% on earnings over £50,270

Scottish Income Tax Bands

Scotland has its own rates and bands. For example, it includes an Intermediate Rate of 21% and a Top Rate of 47%. If you live in Scotland, make sure you're referring to the correct thresholds.

How Payless Accountant Can Help

Navigating tax can be tricky, especially if you have multiple income sources, investments, or are self-employed. At Payless Accountant, we simplify tax for individuals and businesses. Whether it’s tax planning, filing returns, or explaining how to legally reduce your liabilities, we’ve got you covered.

Final Thoughts

Understanding the UK’s tax slabs empowers you to better manage your finances and plan ahead. Knowing what you owe and why is the first step in financial control and peace of mind.

Need help with your tax return or want to make the most of your allowances?
Contact Payless Accountant today for professional and affordable tax solutions.