We take a look at the various tax bands in the United Kingdom

Income tax can be quite difficult to understand for those of us who never studied a financially oriented subject in college or university, so today we are going to take a look at the various tax bands in the United Kingdom and how they impact our earnings on a day to day basis.

Despite the fact that nobody actually likes paying income tax, the truth is that without that source of revenue the government would be unable to provide us with the kind of services and amenities that we have all come to expect from modern life. While it might not be fun seeing so much of your money disappear with each pay cheque, you can lessen the blow by accepting that the money is being used in order to improve the lives of you and others across the country.

In order to understand how much money you will pay in taxes, it is essential that you have a firm grasp of the basics such as the various tax bands in the United Kingdom right now.

There are four income tax bands in operation right now. The first, the lower rate, is also known as the tax free allowance. This is the amount of money you can make before you need to start paying taxes. At the moment, this figure stands at £7,475 per year.

The next band is known as the basic rate. This is charged at 20% on all money earned between £7,475 and £35,000 per year.

After that comes the higher rate, which is charged at 40% of all income between £35,001 and £150,000. And finally comes the additional rate, which is charged at 50% of all sums in excess of £150,000 per year.

In order to keep things fair, the system is cumulative as opposed to outright. For example, if you earn £200,000 per year, you pay no tax on the first £7,475, then 20% on the money from £7,376 to £35,000, then 40% on the money from £35,001 to £150,000 and then 50% on the money from £150,001 to £200,000. The tax bands have been structured in this way to ensure that those earning more money aren't penalised more than those who earn less.

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