Income Tax Rates
If you are required to pay Income Tax you will pay a percentage of your income which exceeds your personal allowance. For details see Income Tax personal allowance. The percentage you are required to pay will depend on your exact income, and where your income comes from:
Income Tax Band Income over personal allowance | Income Tax Rate On earned income | Income Tax Rate On savings | Income Tax Rate On dividends |
Starting rate £1 - £2,230 | 10% | 10% | 10% |
Basic Rate | 22% | 20% | 10% |
Higher Rate | 40% | 40% | 32.5% |
If you are seventy years old with a taxable income of £20,000 a year, your Income Tax personal allowance is £9,030 and your income does not exceed the income limit of £21,800 (see Income Tax personal allowance). You will be required to pay Income Tax on £12,770 of your taxable income. This amount falls into the Basic Rate Income Tax Band, so you will be required to pay Income Tax at the Basic Rate.
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