1. Current rates and allowances

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.

Personal Allowance

Most people’s Personal Allowance is £10,000, unless you were born before 6 April 1948 or your income’s over £100,000.

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.