The rates of Income Tax you pay depend on how much of your taxable income is above your Personal Allowance in the tax year. The current tax year is from 6 April 2014 to 5 April 2015.
Income tax rates
|Tax rate||Taxable income above your Personal Allowance|
|Basic rate 20%||£0 to £31,865
Most people start paying basic rate tax on income over £10,000
|Higher rate 40%||£31,866 to £150,000
Most people start paying higher rate tax on income over £41,865
|Additional rate 45%||Over £150,000|
Example You have £35,000 of taxable income and your Personal Allowance is £10,000. You pay basic rate tax at 20% on £25,000 (£35,000 minus £10,000).
Income Tax on savings interest
Savings interest is automatically taxed at 20%. If you’re on a low income, you may be able to get the interest tax-free or get half of the tax repaid.
Married Couple’s Allowance
If you or your spouse or civil partner were born before 6 April 1935, you may be able to claim Married Couple’s Allowance to reduce your tax bill.
Blind Person’s Allowance
If you’re blind, you may also be able to claim Blind Person’s Allowance.