UK Income Tax Calculator

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Frequently Asked Questions

How does UK income tax work?

The UK has a progressive income tax system with three main bands: Personal Allowance (0% up to �12,570), Basic Rate (20% on �12,571-�50,270), Higher Rate (40% on �50,271-�125,140), and Additional Rate (45% above �125,140). The Personal Allowance reduces by �1 for every �2 income over �100,000.

What is the UK Personal Allowance for 2024/25?

The Personal Allowance is �12,570 for 2024/25. This is the amount you can earn before paying income tax. It is frozen until 2028. The allowance reduces by �1 for every �2 of adjusted net income over �100,000, reaching zero at �125,140.

What are the UK tax bands for 2024/25?

2024/25 UK tax bands: Personal Allowance �0-�12,570 (0%), Basic Rate �12,571-�50,270 (20%), Higher Rate �50,271-�125,140 (40%), Additional Rate �125,141+ (45%). Scottish taxpayers have different bands: Starter 19%, Basic 20%, Intermediate 21%, Higher 42%, Top 47%.

What is National Insurance in the UK?

National Insurance (NI) is a tax that funds the NHS, state pension, and other benefits. For employees (Class 1): 8% on earnings �12,570-�50,270 (main rate) and 2% above �50,270. Employer NI: 13.8% on earnings above �9,100. Self-employed (Class 4): 6% on �12,570-�50,270, 2% above.

What is the UK marriage tax allowance?

The Marriage Allowance allows one spouse/civil partner to transfer 10% of their unused Personal Allowance (�1,260) to their partner. Available if both were born after April 6, 1935, and the transferring spouse earns under �12,570. The recipient must be a Basic Rate taxpayer.

What is the UK tax-free dividend allowance?

The dividend allowance is �500 (2024/25). Dividends above this are taxed at: Basic Rate 8.75%, Higher Rate 33.75%, Additional Rate 39.35%. The allowance was reduced from �1,000 in 2023/24 to �500 in 2024/25. Dividend tax rates increased by 1.25% in 2022.

What is the UK capital gains tax?

Capital Gains Tax (CGT) is charged on the profit from selling assets. Annual exempt amount: �3,000 (2024/25, reduced from �6,000). Rates: Basic Rate taxpayers 10% (18% on residential property), Higher/Additional Rate 20% (24% on residential property). Business Asset Disposal Relief: 10% (lifetime limit �1M).

What is the UK tax on savings?

Savings income has its own allowances: Personal Savings Allowance (0% on interest up to �1,000 Basic Rate, �500 Higher Rate, �0 Additional Rate). Starting Rate for Savings: 0% on up to �5,000 of savings income (if earned income is below �17,570).

What is the UK tax on property income?

Rental income is taxed at your marginal income tax rate. Mortgage interest relief is limited to Basic Rate (20%) tax reduction (section 24 rules). Rent-a-Room scheme: tax-free income up to �7,500 from renting a furnished room in your home.

What is the UK inheritance tax?

Inheritance Tax (IHT) is 40% on estates above �325,000 (nil-rate band). Additional residence nil-rate band of �175,000 if passing main home to direct descendants. Married couples: unused allowance transfers to surviving spouse. Total potential: �1M tax-free for couples.

What is the UK VAT rate?

Standard VAT rate: 20%. Reduced rate: 5% (home energy, children's car seats, sanitary products). Zero rate: 0% (food, books, children's clothing, public transport, prescription drugs). VAT registration threshold: �90,000 annual taxable turnover.

What is the UK student loan repayment?

Student loans are deducted from pay: Plan 1 (pre-2012): 9% on earnings over �22,015. Plan 2 (2012+): 9% on earnings over �27,295. Plan 4 (Scottish): 9% on earnings over �25,375. Postgraduate Loan: 6% on earnings over �21,000. Interest rates vary.

What is the UK state pension and tax?

The new State Pension (2024/25) is �221.20/week (�11,502/year). State Pension is taxable income (via your Personal Allowance). Most pensioners do not pay tax if the State Pension is their only income. You can defer the State Pension for a higher amount.

What is the UK tax code?

Your tax code (e.g., 1257L) tells your employer how much tax-free pay you get. 1257L = �12,570 Personal Allowance. Common codes: BR (all at Basic Rate), D0 (all at Higher Rate), D1 (all at Additional Rate). K codes indicate tax due exceeds allowance.

How does the UK tax self-employment?

Self-employed individuals pay Income Tax and Class 4 National Insurance on profits, plus Class 2 NI (�3.45/week if profits over �12,570). File Self Assessment (SA100) by January 31. Expenses deductible if wholly and exclusively for business. Trading allowance: �1,000 tax-free.

What is the UK corporate tax rate?

Corporation Tax rate: 25% for profits over �250,000, 19% for profits under �50,000, with marginal relief between �50K-�250K (effective rate 26.5% in the margin). Small profits rate: 19% (profits under �50,000).

What is the UK pension tax relief?

Pension contributions get tax relief at your marginal rate. Annual allowance: �60,000 (or 100% of earnings if lower). Tapered annual allowance for high earners (adjusted income over �260,000). Lifetime allowance: abolished from 2024/25. Carry forward unused allowance for 3 years.

What is the UK marriage allowance?

Marriage Allowance lets a spouse/civil partner earning under �12,570 transfer �1,260 of their Personal Allowance to their partner. This saves up to �252 in tax. Available to Basic Rate taxpayers only. Can be backdated for 4 years.

What is the UK Vehicle Excise Duty?

VED (car tax): based on CO2 emissions for cars registered after 2017. First year rate: �0-�2,745. Standard rate: �190/year (most cars), higher for cars over �40,000 (supplement �410 for 5 years). Electric cars: �0 VED (2024/25).

How does the UK tax non-residents?

Non-UK residents pay tax on UK-source income: rental income (20% basic rate), employment income (if working in UK), and capital gains on UK residential property. Non-residents have no Personal Allowance unless from EEA or certain other countries.

What is the UK Stamp Duty Land Tax?

SDLT on residential property: 0% up to �250,000, 5% �250K-�925K, 10% �925K-�1.5M, 12% above. First-time buyers: 0% up to �425,000. Additional homes: 3% surcharge on each band. Non-residents: 2% surcharge.

What is the UK High Income Child Benefit Charge?

If you or your partner earn over �50,000, you must repay some Child Benefit (1% for every �100 over �50,000). At �60,000+, you repay all Child Benefit. Claiming Child Benefit is still important for National Insurance credits.

What is the UK individual savings account (ISA)?

ISA allowance: �20,000/year (2024/25). Tax-free growth and withdrawals. Types: Cash ISA, Stocks & Shares ISA, Innovative Finance ISA, Lifetime ISA (�4,000 limit, 25% bonus for first home or age 60). Junior ISA: �9,000/year.