Holly Mckay
Holly MackayFounder and CEO
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    Home • Everyday Money • Income Tax

    Income Tax for Beginners | Bands, Rates & Free Calculator

    Over 39 million UK adults will pay Income Tax this year, yet most don't fully understand how it works or whether they're paying the right amount. Knowing exactly what you owe and which income counts towards your tax bill is essential for managing your finances effectively.

    Income Tax is charged on your earnings once they exceed £12,570 per year. You'll pay 20% as a basic rate taxpayer (£12,571-£50,270), 40% as a higher rate taxpayer (£50,271-£125,140), or 45% if you earn over £125,140. But it's not just your salary that counts—rental income, side hustles, pension payments, and even eBay sales can push you into a higher tax band.

    Understanding what counts as taxable income and what doesn't could save you hundreds in unnecessary tax payments. Did you know basic rate taxpayers can earn £1,000 in savings interest tax-free, but additional rate taxpayers get nothing?

    Join Boring Money for free to access our complete Income Tax guide, covering:

    • How to calculate exactly what you owe across all income sources

    • Personal Savings Allowance explained—and how to maximise it

    • Which income is tax-free (including side hustle trading allowances)

    • How to check your tax records and spot HMRC errors

    • Self-employment tax obligations and Self Assessment deadlines

    Unlock this article to continue reading

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    Important stuffHolly and the team have worked in the finance industry for many years but we are not regulated to give you personal financial advice. For every story on this website about a good investment, or something which went up by 10% or made someone £200, we could also share a story about a bad investment, something which fell in value or lost someone £200. We aim to provide general information and pointers – and btw we are totally agnostic about which providers you might pick – but if you have complex affairs, want personalised advice or need specific recommendations, please look at advice pages and see if regulated digital or traditional financial advice would be the best solution for your needs. Boring Money Ltd is a limited company registered in England and Wales under registration number 09459832 and we have our registered office at 10 Lower Thames Street, London, England, EC3R 6AF.
    Risk warningAs is always the case with investing, your capital is at risk. The value of your portfolio can go down as well as up and you may get back less than you invest. Tax treatment depends on your individual circumstances and may change in the future.
    Boring Money Ltd is a limited company registered in England and Wales under registration number 09459832 and we have our registered office at 10 Lower Thames Street, London, England, EC3R 6AF.