The basic tax rate (BR) is the Income Tax rate applied to earnings falling between the range of £12,571 to £50,270. This rate is current for the 2023/24 tax year.
What is the standard tax rate?
If you are subject to Brazilian tax, you are required to pay a 20% Income Tax in England and Wales.
What is the mechanism behind its operation?
Taxes are only levied on your income that is subject to taxation. While it may seem obvious, it may be quite perplexing first. Examine the current Income Tax rates.
Let’s examine one example:
- If you make £30,000, you owe 20% tax on £17,729 of your income.
- For an income of £55,000, you are required to pay 20% tax on £37,699 and 40% tax on £4,730.
It’s crucial to note that you may not always be subject to the tax rates mentioned on your total income. It refers to the part of your income that is inside certain tax rates. If you make £155,000, you will be subject to three separate tax rates: the basic rate, the higher rate, and the supplementary rate.
What is the Personal Allowance?
The Personal Allowance is the amount of income that may be earned in the UK without being subject to taxation. If you make less than £12,570, you are not required to pay Income Tax. You may be curious about the absence of the Personal Allowance in the table above. When you earn £100,000 or more, your tax-free Personal Allowance decreases incrementally.
If you earn above £125,140, you will completely lose your right to the Personal Allowance.
