UK income tax rates and tax brackets explained

As the quote famously goes: “Nothing can be said to be certain except death and taxes.” While many of us begrudgingly accept this as truth, understanding tax allowances, tax rates and tax brackets is a little more complex. On this page, we explain what you need to know about income tax rates for 2023/24, how personal allowance works and the different tax thresholds.

In the UK, income tax is the percentage the government imposes on income generated by businesses or individuals. Taxpayers must file an annual income tax return (if you’re employed, your employer will do this for you) to determine the tax band you fall into and how much tax you’ll need to pay.

Income tax is used to fund public services such as the NHS and education, as well as improving things like roads and housing.

UK taxpayers each have a personal allowance, which is the amount you can earn before you start paying income tax. When you earn more than your personal allowance, you pay tax at your applicable income tax rate on the amount you earn above the personal allowance threshold.

The standard tax-free personal allowance is £12,570 for the 2023/24 tax year. This is the amount you typically won’t pay tax on. However, if you earn over £100,000 per annum, your personal allowance reduces by £1 for every £2 you earn. This means that if you earn £125,140, you’ll pay income tax on everything you earn and you won’t be eligible for a tax-free personal allowance.

The standard deduction, also known as personal allowance, is £12,570 for the 2023/24 tax year in the UK. This amount may differ if you claim an allowance and will be less if you earn over £100,000.

You’ll find the UK tax rates for 2023/24 in the tables below. The first table shows the current tax bands for people living in England, Wales and Northern Ireland, and the second table shows the tax brackets for Scotland, which are calculated slightly differently.

You can work out your taxable income by following the three stages set out in the below chart:

In the UK, we have what is known as a progressive taxation system when it comes to income, which means that those earning higher amounts will pay more tax. This is demonstrated in the above table.

Every tax bracket in the UK has a tax threshold, which is the upper limit you can earn each year in that tax bracket. Your tax threshold is made up of your personal allowance, income from work, and income from any other source, such as the interest you might earn on savings accounts (more on that below).

If you earn £12,570 a year or less, you won’t pay any income tax. The next tax threshold is for basic rate taxpayers, who pay 20% tax on an income of £12,571 to £37,700 (in most cases this will be £12,571 to £50,270 if you’re entitled to the full personal allowance).

If you earn more than this amount, you’ll pay the higher rate of 40% tax on anything you earn between £37,701 (£50,271) and £150,000. Once your income is more than £150,000, you’ll pay the additional tax rate of 45% on anything you earn over that amount.

It’s worth noting that your income tax band can also affect how much tax you’ll pay on your savings income. Although the personal savings allowance (PSA) means most people won’t pay tax on the interest they earn from a savings account, if you’re a higher earner or you have a substantial amount of savings you may be liable to a tax charge.

The PSA allows basic rate taxpayers to earn up to £1,000 in tax-free interest, while higher rate taxpayers can receive up to £500 in interest without paying tax. Any interest that exceeds your PSA is taxed at your usual rate of income tax, so 20% for basic rate taxpayers and 40% for higher rate taxpayers. Additional rate taxpayers do not receive a PSA, meaning that all of the interest they earn on their savings is taxed at 45%.

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