{"id":290921,"date":"2025-06-13T14:22:53","date_gmt":"2025-06-13T14:22:53","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/finance\/uk-tax-brackets-and-personal-allowances\/"},"modified":"2025-06-13T14:22:53","modified_gmt":"2025-06-13T14:22:53","slug":"uk-tax-brackets-and-personal-allowances","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=290921","title":{"rendered":"UK tax brackets and personal allowances"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div>\n<p><span class=\"drop_cap\">H<\/span>ey, do you know your tax brackets? I\u2019m talking about the critical bands that determine whether you\u2019re a basic (20%), higher (40%), or additional-rate (45%) taxpayer.<\/p>\n<p>Everyone knows their height and their shoe size. Most teenage boys even spend a furtive moment with a ruler.<\/p>\n<p>But many of us have no idea where the various tax brackets start and end \u2013 nor where our income falls within these bands.<\/p>\n<p>True, the <a href=\"https:\/\/monevator.com\/weekend-reading-higher-calling\/\" target=\"_blank\" rel=\"noopener\">freezing<\/a> of personal tax allowances and income tax thresholds in recent years has made people more aware.<\/p>\n<p>Yet too many people still don\u2019t know how much of their own salary they get to keep, or even how to figure it out.<\/p>\n<p>Let\u2019s begin with some hard numbers. We\u2019ll then get into what your tax bracket means for your take home pay.<\/p>\n<h3>2025\/2026 UK tax brackets<\/h3>\n<p>The rate of tax you pay depends on your total income from all sources. This includes salary, interest, dividends, pensions, property letting, and so on.<\/p>\n<p>You add up all this income to get your total income figure.<\/p>\n<p>You then <strong>subtract your personal allowance<\/strong> from the total to see which tax bracket you fit into. More on that in a moment.<\/p>\n<p>For England, Wales, and Northern Ireland, the income bands after allowances are currently:<\/p>\n<table class=\"Mon_Table\" border=\"0\" width=\"540\">\n<tbody>\n<tr class=\"Tab_Rowhead\">\n<td class=\"Tab_RowheadLeft\">Income Tax Rate<\/td>\n<td class=\"Tab_Rowhead\">2024\/2025<\/td>\n<td class=\"Tab_Rowhead\">2025\/2026<\/td>\n<\/tr>\n<tr class=\"Tab_RowGeneral\">\n<td class=\"Tab_ColGeneralLeft\">Starting rate for savings: 0%<\/td>\n<td class=\"Tab_ColGeneral\">\u00a30-\u00a35,000<\/td>\n<td class=\"Tab_ColGeneral\">\u00a30- \u00a35,000<\/td>\n<\/tr>\n<tr class=\"Tab_RowOdd\">\n<td class=\"Tab_ColGeneralLeft\">Basic rate: 20%<\/td>\n<td class=\"Tab_ColGeneral\">\u00a30- \u00a337,700<\/td>\n<td class=\"Tab_ColGeneral\">\u00a30- \u00a337,700<\/td>\n<\/tr>\n<tr class=\"Tab_RowGeneral\">\n<td class=\"Tab_ColGeneralLeft\">Higher rate: 40%<\/td>\n<td class=\"Tab_ColGeneral\">\u00a337,701-\u00a3125,140<\/td>\n<td class=\"Tab_ColGeneral\">\u00a337,701-\u00a3125,140<\/td>\n<\/tr>\n<tr class=\"Tab_RowGeneral\">\n<td class=\"Tab_ColGeneralLeft\">Additional 45% rate<\/td>\n<td class=\"Tab_ColGeneral\">\u00a3125,141 and above<\/td>\n<td class=\"Tab_ColGeneral\">\u00a0\u00a3125,141 and above<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p class=\"montabcaption\">Source: <a href=\"https:\/\/www.gov.uk\/government\/publications\/rates-and-allowances-income-tax\/income-tax-rates-and-allowances-current-and-past\" target=\"_blank\" rel=\"noopener\">HMRC<\/a><\/p>\n<p>Note: If your non-savings taxable income is above the starting rate limit, then the starting savings rate does not apply to your savings income.<\/p>\n<p>Scotland has its own (similar) tax rates. Refer to the <a href=\"https:\/\/www.mygov.scot\/scottish-income-tax\/current-income-tax-rates\" target=\"_blank\" rel=\"noopener\">Scottish Government<\/a> for the gory details.<\/p>\n<p>If you prefer to think in terms of tax bands \u2013 that is, before deducting the personal allowance \u2013 then for England, Wales, and Northern Ireland these are:<\/p>\n<ul>\n<li>Personal allowance at 0%: \u00a312,570<\/li>\n<li>Basic rate 20% \u2013 \u00a312,571 to \u00a350,270<\/li>\n<li>Higher rate 40% \u2013 \u00a350,271 to \u00a3125,140<\/li>\n<li>Additional rate 45% \u2013 \u00a3125,141 to the moon<\/li>\n<\/ul>\n<p>Again, the higher rate threshold has been frozen until 2028.<\/p>\n<p class=\"note\"><strong>Complicating factor alert!<\/strong> If you earn over <strong>\u00a3100,000<\/strong> you\u2019ll pay a marginal rate of <strong>60%<\/strong> on some of your income. What joy! More below.<\/p>\n<h3>2025\/2026 personal allowance<\/h3>\n<p>The <a href=\"https:\/\/monevator.com\/uk-tax-deadline\/\" target=\"_blank\" rel=\"noopener\">tax year<\/a> runs from 6 April to 5 April the next year.<\/p>\n<p>All of us have a basic level of income \u2013 whether we\u2019re employed or self-employed \u2013 that we can earn during this period before we have to pay income tax.<\/p>\n<p>But once your allowance is used up, the government starts to take its cut via income tax.<\/p>\n<p>Everyone starts with the same personal allowance:<\/p>\n<ul>\n<li>For 2025\/26, this<strong> personal allowance is \u00a312,570<\/strong><\/li>\n<\/ul>\n<p>Your personal allowance may be bigger if you qualify for Married Couple\u2019s Allowance or Blind Person\u2019s Allowance. It\u2019s reduced if your income is over \u00a3100,000. We\u2019ll get to that in a minute.<\/p>\n<p>Note the \u00a312,570 personal allowance is still the same as it was in 2021\/22, and it\u2019s frozen until 2028. This was <a href=\"https:\/\/news.sky.com\/story\/sunak-defends-tax-changes-as-a-fair-way-to-help-solve-the-problems-that-we-need-to-12235370\" target=\"_blank\" rel=\"noopener\">purportedly<\/a> to raise revenue to pay for extra State spending during the pandemic.<\/p>\n<p>Freezing the allowance means that as your salary rises over the years, proportionally less of it is covered by the tax-free band. You\u2019ll therefore lose a greater share of your income to tax.<\/p>\n<p>Another consequence of freezing the personal allowance is it will soon be insufficient to fully cover the state pension.<\/p>\n<p>The state pension is currently \u00a311,973 a year \u2013 just squeaking under the \u00a312,570 personal allowance. But if the pension continues to rise as expected over the next two years then an estimated 12 million people will pay some income tax on their state pension from 2027.<\/p>\n<h4>Blind Person\u2019s and Married Couple\u2019s allowance<\/h4>\n<p>There are two other personal allowances you might qualify for:<\/p>\n<p>These are added to the standard personal allowance, if you qualify. They can give you or your spouse a slightly higher personal allowance.<\/p>\n<ul>\n<li><em>MoneySavingExpert<\/em> has <a href=\"https:\/\/www.moneysavingexpert.com\/family\/marriage-tax-allowance\/\" target=\"_blank\" rel=\"noopener\">a good guide<\/a> to the Married Couple\u2019s Allowance.<\/li>\n<\/ul>\n<h4>The 60% tax trap for those earning \u00a3100,000 or more<\/h4>\n<p>If you\u2019re on a six-figure salary then I\u2019ve got some unpleasant numbers for you.<\/p>\n<p>Anyone with an income of over \u00a3100,000 sees their personal allowance reduced by \u00a31 for every \u00a32 of income above the \u00a3100,000 threshold.<\/p>\n<p>This effectively pushes up the <a href=\"https:\/\/taxscouts.com\/high-earner-tax-returns\/what-is-the-60-percent-tax-trap\/\" target=\"_blank\" rel=\"noopener\">marginal rate<\/a> of tax you pay on income between \u00a3100,000 and \u00a3125,140 to 60%.<\/p>\n<p>On earnings above \u00a3125,140, the 45% additional tax rate applies.<\/p>\n<p>Ironically, you\u2019re taxed at a lower rate on your income above the \u00a3125,140 than on what you earn between \u00a3100,000 and \u00a3125,140. That\u2019s because your personal allowance has been totally whittled away by this point.<\/p>\n<p>The effective 60% marginal rate you\u2019ll pay on the \u00a325,140 chunk of income between \u00a3100,000 and \u00a3125,140 is far higher than official tax rates indicate.<\/p>\n<p>If your income falls within the tax trap band, there\u2019s a strong case for increasing your pension contributions by enough to reduce your taxable income to below \u00a3100,000. Rather than paying 60% tax on your income above \u00a3100,000 to HMRC, you\u2019ll instead get generous tax relief on your extra pension savings.<\/p>\n<p>Remember: you can put up to \u00a360,000 into a pension every tax year.<\/p>\n<h4>The child benefit booby-trap<\/h4>\n<p>Got kids? There\u2019s a similar effective hike in the marginal tax rate when either parent earns over \u00a360,000 a year.\u00a0<\/p>\n<p>Child benefit is available to parents of children under 20. But this benefit is progressively withdrawn above the \u00a360,000 threshold, via a fiddly <a href=\"https:\/\/www.gov.uk\/child-benefit-tax-charge\" target=\"_blank\" rel=\"noopener\">High Income Child Benefit Charge<\/a> that sees you repay 1% of your child benefit for every \u00a3200 you earn above the threshold.<\/p>\n<p>For example, if you earn \u00a370,000 \u2013 that is, \u00a310,000 above the income threshold \u2013 then you would need to repay 50% of the full child benefit amount. (Because \u00a310,000\/\u00a3200 = 50).<\/p>\n<p>At \u00a380,000 you\u2019ll pay it all back. (\u00a320,000\/\u00a3200 = 100).<\/p>\n<p>Depending on how many kids you have \u2013 and hence how much child benefit you\u2019ll be repaying \u2013 this could equate to an effective tax rate of as much as 56% on earnings between \u00a360,000 to \u00a380,000 if you have three qualifying children.<\/p>\n<p>Again, you might want to see if you can increase your pension contributions to <a href=\"https:\/\/monevator.com\/how-to-keep-child-benefit-and-retire-richer\/\" target=\"_blank\" rel=\"noopener\">keep your child benefit<\/a> whilst improving your long-term financial future.<\/p>\n<h3>How tax brackets work to determine the tax you pay<\/h3>\n<p>Let\u2019s run through a couple of examples to show how this all works.<\/p>\n<h4>Basic-rate tax payer<\/h4>\n<p>Let\u2019s say you will earn \u00a345,000 in 2025\/26 from all sources. Your taxable income is \u00a345,000 minus your personal allowance of \u00a312,571.<\/p>\n<p>So \u00a332,429.<\/p>\n<p>This means all your income is in the 20% tax bracket, as it\u2019s less than \u00a337,701 in the first table above.<\/p>\n<p>In practice you\u2019ll pay no tax on the first \u00a312,571 you earn, and 20% on the remaining \u00a332,429.<\/p>\n<p>You\u2019ll therefore pay \u00a36,486 in tax on your income.<\/p>\n<h4>Higher-rate payer<\/h4>\n<p>Now let\u2019s imagine your total income adds up to \u00a360,000.<\/p>\n<p>By the same method (\u00a360,000 minus \u00a312,571) your taxable income is \u00a347,429.<\/p>\n<p>The first \u00a337,701 of this will be taxed at 20%.<\/p>\n<p>The rest \u2013 \u00a39,728 \u2013 is taxed at 40%.<\/p>\n<p>You\u2019ll pay:<\/p>\n<ul>\n<li>Basic rate tax of \u00a37,540<\/li>\n<li>Higher rate tax of \u00a33,891<\/li>\n<li>Total tax paid is \u00a311,431<\/li>\n<\/ul>\n<p>In nearly all cases you\u2019ll also pay additional and hefty National Insurance contributions.<\/p>\n<h3>National Insurance<\/h3>\n<p>National Insurance works separately from income tax. But in practice it\u2019s just an extra tax you pay on your earnings.<\/p>\n<p>National Insurance comes with its own fiddly rules \u2013 and in recent years the Government has been prone to messing with them.<\/p>\n<p>That\u2019s because people find it even harder to keep track of what they\u2019re paying in National Insurance than with income tax. National Insurance rates are therefore less politically contentious than income tax rates.<\/p>\n<p>The big news <a href=\"https:\/\/www.reuters.com\/world\/uk\/uks-reeves-raises-employers-national-insurance-contributions-2024-10-30\/\" target=\"_blank\" rel=\"noopener\">recently<\/a> was a hike in <em>employer<\/em> National Insurance contributions (NICs) in the October 2024 Budget. From April 2025, the government reduced the threshold at which employer NICs become payable from \u00a39,100 to \u00a35,000 per annum and it raised the main rate of employer NIC contributions from 13.8% to 15%. To slightly ease the resultant pain on employers, it also made certain allowances that companies can claim a bit more generous.<\/p>\n<p>The net result is a higher \u2018tax on jobs\u2019, as the tabloids put it. The Treasury estimated at the time the changes would raise an <a href=\"https:\/\/assets.publishing.service.gov.uk\/media\/6721d2c54da1c0d41942a8d2\/Policy_Costing_Document_-_Autumn_Budget_2024.pdf\" target=\"_blank\" rel=\"noopener\">additional<\/a> \u00a324bn in revenues in the 2025 to 2026 tax year.<\/p>\n<p>You don\u2019t directly pay employer\u2019s NICs. The company you work for does. But I\u2019d say the chances of employers absorbing all the cost of these hikes without a hit to wages or job creation are remote.<\/p>\n<p>At least the rates of NICs we pay directly were not changed in 2024, thanks to pre-election pledges concerning taxes on working people.<\/p>\n<p>This arrested a pattern of messing around with NIC rates that has seen the goal posts move multiple times over the past few years.<\/p>\n<h4>Sidebar: a brief history of recent NIC changes<\/h4>\n<p>The main National Insurance rate <em>for employees<\/em> was cut from 12% to 10% on 6 January 2024.<\/p>\n<p>The rate was cut again to 8% in April 2024.<\/p>\n<p>Yet it was only in 2022 that National Insurance rates had been hiked by 1.25%. Ostensibly this was to pay for the NHS and social care.<\/p>\n<p>No wonder so few people have any idea where NIC rates stand today.<\/p>\n<p>One recent-ish change was sensible, however. From 6 July 2022 the personal allowance became the threshold for starting National Insurance payments. This means everything you earn <strong>within the personal allowance<\/strong> is now 100% yours to keep \u2013 with no tax or National Insurance to pay.<\/p>\n<p>It was a welcome piece of simplification in a sea of complexity.<\/p>\n<p>Indeed, anything else we write here about National Insurance will not be exhaustive enough to stop someone saying <em>\u201cwhat about X?\u201d<\/em> in the comments.<\/p>\n<p>Don\u2019t blame us! Blame the labyrinthine UK tax system.<\/p>\n<h4>National Insurance rates<\/h4>\n<p>Just briefly then, most employees currently pay what are called \u2018Class 1\u2019 contributions at the following rates:<\/p>\n<table class=\"Mon_Table\" border=\"0\" width=\"540\">\n<thead>\n<tr>\n<th scope=\"col\">Your salary<\/th>\n<th scope=\"col\">6 April 2025 to 5 January 2026<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td style=\"text-align: center;\">\u00a3242 to \u00a3967 a week (\u00a31,048 to \u00a34,189 a month)<\/td>\n<td style=\"text-align: center;\">8%<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: center;\">Over \u00a3967 a week (\u00a34,189 a month)<\/td>\n<td style=\"text-align: center;\">2%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p class=\"montabcaption\">Source: <a href=\"https:\/\/www.gov.uk\/national-insurance\/how-much-you-pay\" target=\"_blank\" rel=\"noopener\">HMRC<\/a><\/p>\n<p>As discussed, your employer also pays National Insurance contributions, based on your salary. This gives rise to the technique known as <a href=\"https:\/\/monevator.com\/salary-sacrifice\/\" target=\"_blank\" rel=\"noopener\">salary sacrifice<\/a>.<\/p>\n<p>With salary sacrifice you give up pay in return for some other benefit \u2013 usually extra <a href=\"https:\/\/monevator.com\/rich-optimal-pension-contributions\/\" target=\"_blank\" rel=\"noopener\">pension contributions<\/a>. You get the benefit, and you and your employer also pay less National Insurance.<\/p>\n<p>Self-employed people make <a href=\"https:\/\/www.litrg.org.uk\/working\/self-employment\/nic-self-employed\" target=\"_blank\" rel=\"noopener\">different contributions<\/a>, depending on profits. These are typically worked out via a self-assessment tax return.<\/p>\n<p>In a sensible world National Insurance would be merged with income tax. This doesn\u2019t happen because (a) supposedly the money raised is set aside for state pensions and other welfare funding (it\u2019s not) and (b) no UK government wants to been seen setting an income tax rate that\u2019s explicitly above 50%.<\/p>\n<h3>Your tax bracket determines your take home pay<\/h3>\n<p>Like many students, I was philosophically a left-wing tax-and-spender.<\/p>\n<p>It was a pretty low-stress position to hold when I paid no taxes\u2026<\/p>\n<p>\u2026but then I got a job.<\/p>\n<p>Suddenly I saw how much money would be taken out of the meagre pay I received for ramming my head repeatedly into the coalface for 40 hours a week. Economically speaking, I turned more to the right.<\/p>\n<p>As my dad used to say, quoting someone else:<\/p>\n<blockquote>\n<p>If you\u2019re not a socialist at 20 you haven\u2019t got a heart.<\/p>\n<p>If you\u2019re not a capitalist at 30 you haven\u2019t got a head.<\/p>\n<\/blockquote>\n<p>I\u2019d add: if you don\u2019t know your tax bracket by now then you haven\u2019t got a clue.<\/p>\n<p>Most of us care about what we get to keep, after tax. We\u2019re not so preoccupied with how our taxes help to fund the NHS or to pay interest on the UK\u2019s national debt \u2013 vital though all that may be.<\/p>\n<p>So when we start working \u2013 and we start paying taxes \u2013 we\u2019re shocked by how little of our pay actually makes it into our bank accounts.<\/p>\n<h3>Beyond the sticker shock<\/h3>\n<p>Knowing your tax bracket is about more than just stopping you from fainting when you see your take home pay, though.<\/p>\n<p>Armed with your knowledge of tax brackets, you can be <a href=\"https:\/\/monevator.com\/how-much-wealth-do-i-need-in-my-isa-versus-my-sipp-to-achieve-financial-independence\/\" target=\"_blank\" rel=\"noopener\">more strategic<\/a> about adding money to ISAs and pensions.<\/p>\n<p>As we\u2019ve seen above, the tax system gets progressively more punishing as your salary passes through various thresholds. You might therefore prefer to put more of your more higher-taxed earnings into a pension, for example.<\/p>\n<p>Thanks to pension tax relief, you\u2019ll sacrifice less of a share of your post-tax disposable income, while you\u2019re also building up a bigger <a href=\"https:\/\/monevator.com\/how-much-do-i-need-to-retire\/\" target=\"_blank\" rel=\"noopener\">retirement pot<\/a>.<\/p>\n<h3>A fiscal drag<\/h3>\n<p>The tax take from British workers has been rising for more than a decade.<\/p>\n<p>This was partly achieved by \u2018fiscal drag\u2019.<\/p>\n<p>Fiscal drag sees rising salaries pulling more workers into the higher-rate tax bands, because the tax band thresholds and allowances are frozen or only raised by a bit \u2013 despite high inflation.<\/p>\n<p>After the financial crisis of 2008\/2009, the threshold for higher-rate tax was actually explicitly lowered, despite inflation running above target. That move dragged millions more people <a title=\"The IFS runs the numbers\" href=\"http:\/\/www.ifs.org.uk\/publications\/7204\">into the higher-rate tax bracket<\/a>.<\/p>\n<p>National Insurance rates also rose for higher-rate tax payers. And the wheeze that cut the personal allowance on incomes above \u00a3100,000 was introduced at this time, too.<\/p>\n<p>True, the additional rate of income tax was reduced from a short-lived 50% to 45% in 2013. And eventually both the personal allowance and the higher-rate tax thresholds were lifted.<\/p>\n<p>But as we\u2019ve seen above, they were later frozen until 2028. (And <a href=\"https:\/\/uk.finance.yahoo.com\/news\/reeves-won-t-rule-extending-112213637.html\" target=\"_blank\" rel=\"noopener\">maybe<\/a> they won\u2019t be lifted even then).<\/p>\n<p>In short, if you remember the arcade game <em>Frogger<\/em>, that\u2019s a good analogy for the ever-changing UK\u2019s income tax landscape.<\/p>\n<h4>Bring me higher (tax) love<\/h4>\n<p>Some may quibble with my simplified narrative. But it\u2019s directionally correct.<\/p>\n<p>See this graph from the IFS, and pay particular attention to the yellow line:<\/p>\n<p><a href=\"https:\/\/i0.wp.com\/monevator.com\/wp-content\/uploads\/2022\/05\/UK-tax-payers-over-time.jpg?ssl=1\"><img data-recalc-dims=\"1\" fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter size-full wp-image-80732\" src=\"https:\/\/i0.wp.com\/monevator.com\/wp-content\/uploads\/2022\/05\/UK-tax-payers-over-time.jpg?resize=1000%2C996&amp;ssl=1\" alt=\"\" width=\"1000\" height=\"996\" srcset=\"https:\/\/i0.wp.com\/monevator.com\/wp-content\/uploads\/2022\/05\/UK-tax-payers-over-time.jpg?w=1000&amp;ssl=1 1000w, https:\/\/i0.wp.com\/monevator.com\/wp-content\/uploads\/2022\/05\/UK-tax-payers-over-time.jpg?resize=300%2C300&amp;ssl=1 300w, https:\/\/i0.wp.com\/monevator.com\/wp-content\/uploads\/2022\/05\/UK-tax-payers-over-time.jpg?resize=150%2C150&amp;ssl=1 150w, https:\/\/i0.wp.com\/monevator.com\/wp-content\/uploads\/2022\/05\/UK-tax-payers-over-time.jpg?resize=768%2C765&amp;ssl=1 768w\" sizes=\"(max-width: 1000px) 100vw, 1000px\"\/><\/a><\/p>\n<p class=\"montabcaption\">Source: <a href=\"https:\/\/ifs.org.uk\/publications\/tax-and-public-finances-fundamentals\" target=\"_blank\" rel=\"noopener\">IFS<\/a><\/p>\n<p>You can see that the numbers paying higher rates of tax (yellow line) has hugely increased since 2009 \u2013 let alone 1990.<\/p>\n<p>Perhaps that\u2019s fine. You might even argue the rise in higher-rate taxpayers is a reflection of rising income inequality as much as frozen tax bands.<\/p>\n<p>We can debate that another day. I\u2019m just pointing out how things have been going \u2013 and what might happen next.<\/p>\n<p>We just lived through a period of historically high inflation. After peaking in double-digits, inflation is still above-target at 3.5%. Yet both the personal allowance and the thresholds for higher-rate taxes remain frozen.<\/p>\n<p>Unless the government changes course, <a href=\"https:\/\/gbac.co.uk\/blog\/more-higher-rate-taxpayers-than-ever-expected-by-2028\/\" target=\"_blank\" rel=\"noopener\">millions more<\/a> workers will be dragged into paying higher and additional-rate taxes over the next few years.<\/p>\n<h3>A higher calling<\/h3>\n<p>If you\u2019re a higher earner wondering why you\u2019re not feeling as wealthy as you think you should, higher taxes will have something to do with it.<\/p>\n<p>Okay, and higher mortgage rates and energy and food bills since 2022.<\/p>\n<p>(Not to mention <a href=\"https:\/\/www.sciencedirect.com\/topics\/psychology\/hedonic-adaptation\" target=\"_blank\" rel=\"noopener\">hedonic adaption<\/a>! But let\u2019s stay on-topic.)<\/p>\n<p>The truth is being a higher-rate tax payer no longer means your wealthy.<\/p>\n<p>Yes, I\u2019m aware that the <a href=\"https:\/\/www.ons.gov.uk\/employmentandlabourmarket\/peopleinwork\/earningsandworkinghours\/bulletins\/annualsurveyofhoursandearnings\/2024\" target=\"_blank\" rel=\"noopener\">median annual earnings<\/a> in the UK for full-time employees is still less than \u00a338,000 \u2013 well below the higher-rate bracket. Nobody needs to get on a soap box to shout at me.<\/p>\n<p>But the fact stands. Paying higher-rate tax hardly makes you <a href=\"https:\/\/en.wikipedia.org\/wiki\/Bertie_Wooster\" target=\"_blank\" rel=\"noopener\">Bertie Wooster<\/a> these days.<\/p>\n<h3>Resistance is tax-efficient<\/h3>\n<p>I\u2019m all for taxing, spending, and the UK offering a decent welfare safety net.<\/p>\n<p>But I\u2019m not going to leave a tip.<\/p>\n<p>I\u2019m a law-abiding citizen. However there are sensible and legal steps you can take to <a href=\"https:\/\/monevator.com\/tax-avoidance-versus-tax-evasion\/\" target=\"_blank\" rel=\"noopener\">mitigate<\/a> your total tax bill.<\/p>\n<p>Use your <a title=\"ISAs are great for investors\" href=\"https:\/\/monevator.com\/annual-isa-allowance\/\">ISA allowance<\/a> and\/or a <a title=\"Pensions are much more attractive than they were\" href=\"https:\/\/monevator.com\/sipps-vs-isas-best-pension-vehicle\/\">pension<\/a> to shelter your savings as much as as possible. Take steps to manage <a title=\"Avoiding capital gains tax\" href=\"https:\/\/monevator.com\/avoiding-capital-gains-tax\/\">capital gains tax<\/a>. You could also consider VCTs and <a href=\"https:\/\/monevator.com\/what-are-enterprise-investment-schemes\/\" target=\"_blank\" rel=\"noopener\">EIS<\/a> schemes if you\u2019re up for the research, extra costs, and greater risks.<\/p>\n<p>Higher-rate taxpayers should consider making maximal contributions into their pension. Most people are allowed to pay up to \u00a360,000 into a pension in a year without any tax penalties, so there\u2019s lots of headroom.<\/p>\n<p>If you can <a href=\"https:\/\/monevator.com\/big-savings-quality-of-life\/\" target=\"_blank\" rel=\"noopener\">cut your spending<\/a> by enough to allow for very big pension contributions, then you might be able to get the higher-rate tax you\u2019d otherwise pay entirely wiped out by tax relief. Depending on how much you earn, of course.<\/p>\n<p>Such pension contributions <a href=\"https:\/\/monevator.com\/sipps-vs-isas-best-pension-vehicle\/\" target=\"_blank\" rel=\"noopener\">accelerate the growth<\/a> of your retirement pot. Just remember you\u2019ll almost certainly have to pay some tax when you drawdown a pension income later.<\/p>\n<p><a href=\"https:\/\/monevator.com\/not-your-fathers-retirement\/\" target=\"_blank\" rel=\"noopener\">Changes<\/a> over the past decade have made pensions much more attractive. Even I, a former pension-phobe, would prefer to lock away some of my money for many years in a pension than to chuck it away by paying a 40% or 45% tax rate today \u2013 let alone an effective marginal rate of 60%.<\/p>\n<p>The bottom line? Taxes are continuing to rise. Take cover, or take the pain.<\/p>\n<p><em>Note: This article was updated in June 2025 with the latest figures for UK tax brackets, personal allowances, NICs, median pay, and more. Comments below may refer to old numbers. Please check the dates if unsure.<br \/><\/em><\/p>\n<div class=\"wwsgd_new_visitor\" style=\"display:none;\">\n<p class=\"alert\"><b>Thanks for reading!<\/b> Monevator is a spiffing blog about making, saving, and investing money. Please do <a href=\"https:\/\/monevator.com\/subscribe\/\" rel=\"nofollow\" target=\"blank\">sign-up<\/a> to get our latest posts by <a href=\"https:\/\/monevator.com\/subscribe\/\" rel=\"nofollow\" target=\"blank\">email<\/a> for free.  Find us on <a href=\"https:\/\/twitter.com\/Monevator\" rel=\"nofollow\" target=\"blank\">Twitter<\/a> and <a href=\"https:\/\/www.facebook.com\/Monevator\" rel=\"nofollow\" target=\"blank\">Facebook<\/a>. Or peruse a few of our <a href=\"https:\/\/monevator.com\/highlights\/\" rel=\"nofollow\" target=\"blank\">best articles<\/a>.<\/p>\n<\/div><\/div>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><script>(function(d, s, id) {\n  var js, fjs = d.getElementsByTagName(s)[0];\n  if (d.getElementById(id)) return;\n  js = d.createElement(s); js.id = id;\n  js.src = \"\/\/connect.facebook.net\/en_GB\/sdk.js#xfbml=1&version=v2.6\";\n  fjs.parentNode.insertBefore(js, fjs);\n}(document, 'script', 'facebook-jssdk'));<\/script><br \/>\n<br \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Hey, do you know your tax brackets? I\u2019m talking about the critical bands that determine whether you\u2019re a basic (20%), higher (40%), or additional-rate (45%) taxpayer. Everyone knows their height and their shoe size. Most teenage boys even spend a furtive moment with a ruler. But many of us have no idea where the various [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":290922,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[93],"tags":[32230,16058,1140,7356],"dealstore":[],"offerexpiration":[],"class_list":["post-290921","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-allowances","tag-brackets","tag-personal","tag-tax"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>UK tax brackets and personal allowances - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=290921\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"UK tax brackets and personal allowances - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"Hey, do you know your tax brackets? 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