Short and sweet blog today! I just wanted to have an article where people could easily find the tax rates for this year (2016-2017) but If you’re looking for information on what ‘income tax’ is then please see my previous blog here otherwise below is a simple breakdown of all the different income tax brackets and what each rate has to pay:
£0.00 – £11,000
This is technically not a ‘rate’ but I wanted to include it since the personal allowance has gone up to £11,000 this year. This it the standard ‘allowance’ every person has, which means you can earn an income of up to £11,000 without paying any tax. Happy days!
£0.00 – £32,000
This is the first ‘rate’ and is the most common. You’ll of course only start to pay 20% tax once you earn an income of over £11,000 per year (hence why I wanted to include the ‘personal allowance’ to help explain haha).
£32,001 – £150,000
The higher tax rate of 40% only applies to any income you earn over the £32,000 mark – so for example is you earned £35,000 then you would pay 20% tax on £32,000 and then 40% tax on the remaining £3,000.
This additional rate is paid as well as the basic and higher rate, but you’ll only pay 45% tax for the income over £150,000. For example if you earned £160,000 then you would pay 20% tax on £32,000, 40% tax on £118,00 and then 45% tax on the remaining £10,000.
So all you’ll notice as you go up the different tax rates you only pay the percentage applicable to that chunk of money (e.g.) if you earned over £150,000 then you wont have to pay 45% tax on your entire income, only the amount that is over the additional rate. It’s as simple as that!