UK Income Tax Brackets Which One Am I in?

Andrew Passer • 25 January 2023

Income Tax -Which tax bracket am I in?

Probably one of the most common questions my new clients ask me is "which income tax bracket am I in?"

The budget has seen a lot of changes recently, and keeping up with the latest updates can be taxing! (excuse the pun). When it comes to paying income tax, whether you are a small business owner or self-employed individual, it's important to stay informed about the current UK tax brackets for the 2024/2025 tax year.


Both basic rate taxpayer and high earners will need to keep an eye on the changes.


The UK income tax system is progressive, meaning that as your income increases, the rate of income tax you have to pay, increases with it. 


UK tax brackets for this tax year are as follows

  • Personal Allowance: £0 to £12,570 (0% tax)
  • Basic Rate: £12,571 to £50,270 (20% tax)
  • Higher Rate: £50,271 to £125,140 (40% tax)
  • Additional Rate: Over £125,140 (45% tax)


It is important to understand how these tax bands may affect your personal income and financial situation. 



Personal Tax Allowance England, Wales, Northern Ireland

What’s the personal allowance for 2023/24?

The personal allowance in 2024/25 will remain £12,570. This is how much money you can earn tax free.


In April 2022 the personal allowance increased from £12,000 to £12,570. The government has frozen this tax allowance until 2026.


If your income is above £100,000, basic personal allowance is reduced by £1 for each £2 you earn over the £100,000 limit, irrespective of age.


This means that if you earn £125,000 or more, you'll receive no personal allowance and all your income is taxed. This is known as the 60% tax trap.

The highest earning 1% in the UK pay an estimated 28% of all income tax


Will you be paying more tax?


Businesses and taxpayers in general faced rising costs throughout 2025, with high interest rates, high food and petrol prices. The freeze in the thresholds will mean that more people will find themselves paying tax for the first time, or in a higher bracket over the next few years. So higher taxes overall.


You may also be eligible for certain tax reliefs, depending on your circumstances, which can reduce the amount of tax you pay. Always seek advice on tax planning and make sure you are taking advantage of any tax reliefs that may be available to you.


If you need help understanding your tax situation, pension contributions, tax dividends and how to pay income tax. Ask your accountant.


Useful resources

https://www.gov.uk/income-tax-rates


ANDREW PASSER ACCOUNTANT

Contact Me If You Have Any Questions About Your Tax

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