Income tax

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Pay and pensions
02 November 2016
This page summarises the income tax arrangements for the current financial year.

Personal allowance (PA)

The basic personal allowances for 2017/18 are:

  • All ages - £11,500

For those earning up to £100,000. Above that, it decreases from £11,000 by £1 for every £2 over that you earn. Consequently, it is reduced to £0 for someone earning £123,000.

Tax Rate

After your PA, the next £33,500 of your income will be taxed at 20%. Based on a PA of £11,000, as for most people, this means between £11,500 and £45,000.

Taxable income between PA plus £33,500 (£45,000) and £150,000 will be taxed at 40%. NB – lower PA over £100,000 see above.

Taxable income over £150,000 will be taxed at 45%.

Pensions in payment are taxed as income under the above regime. If you have other earnings as well, HMRC will issue a tax coding for each source of income, and you will have only one personal tax allowance overall.

See also