4 ms·
There are the advertised tax brackets, and then there are the effective ones. The effective ones are: 0-£12,570 (0%) £12,571-£50,270 (20%) £50,271-£99,999 (40%
by indigomm 5y ago
There are the advertised tax brackets, and then there are the effective ones. The effective ones are:
0-£12,570 (0%)
£12,571-£50,270 (20%)
£50,271-£99,999 (40%)
£100,000-£125,140 (60%)
£125,141-£150,000 (40%)
£150,001+ (45%)
The 60% arrises because your personal allowance is reduced by £1 for every £2 you earn over £100,000 until is disappears entirely.
- yrro 5y agoHere's a nice chart that shows what % of tax you pay in combined income tax & national insurance (blue line) https://en.wikipedia.org/wiki/Taxation_in_the_United_Kingdom#/media/File:Percentage_IT_and_NI_and_Marginal_Taxrate.png https://en.wikipedia.org/wiki/Taxation_in_the_United_Kingdom... And here's a chart to go along with it to show where people fit along the X axis: https://en.wikipedia.org/wiki/Income_in_the_United_Kingdom#/media/File:Number_of_Individuals_in_the_UK_by_Total_PreTax_Income.png https://en.wikipedia.org/wiki/Income_in_the_United_Kingdom#/...
- Silhouette 5y agoBut then you have to factor in National Insurance contributions, which also have a (different) threshold below which they don't cost anything, then cost you 12% up to around the £50K mark, then cost you 2% over that. And even that isn't quite the whole story, because you'll also lose certain child-related benefits starting from £50K if you have kids, so your effective rate for the next £10K or so can work out much higher than 40%. Then there are the effects of not-unusual things like pension contributions and charitable donations, which can move things around a bit more. It's hardly a surprise that people find the system confusing!