Scotland Times

Wednesday, Jul 24, 2024

What is income tax and how much will I pay?

What is income tax and how much will I pay?

Income tax is the government's single biggest source of money.

Income tax is a significant source of government revenue, and while no major changes are expected in the Autumn Statement, measures announced previously mean that millions of people will pay more in taxes. Key points include:

  1. Income Tax Thresholds: The income tax personal allowance has been frozen at £12,570 until April 2028, meaning more people will start paying tax as wages rise due to fiscal drag. The freeze also applies to higher tax rate thresholds.

  2. Tax on Various Income Sources: Income tax is applied to earnings from employment and self-employment, some benefits and pensions, rental income, and returns from savings and investments above certain limits. Scotland has different tax rules.

  3. Basic Rate: The basic rate of income tax, 20%, applies to earnings between £12,571 and £50,270 per year.

  4. Higher Rate: The higher rate, 40%, applies to earnings between £50,271 and £125,140. Once you earn over £100,000, you start losing your tax-free personal allowance.

  5. Additional Rate: The additional rate, 45%, applies to earnings above £125,140 per year.

  6. National Insurance (NI): Similar to income tax, NI is deducted from your wages. The thresholds for NI are similar to income tax, with rates of 12% on earnings up to £50,271 and 2% on earnings above that. NI thresholds will also be frozen until April 2028.

  7. Scotland: Scotland has different income tax rates, with five bands ranging from a starter rate of 19% to a top rate of 47%.

  8. Tax Historically: Tax revenue as a proportion of the economy is expected to rise to 37.7% by 2027-28, which would be the highest level ever recorded.

  9. International Comparison: In 2021, the UK's tax revenue as a proportion of the economy was 33.5%, placing it in the middle of the G7 group of major economies. France, Italy, and Germany tax more, while Canada, Japan, and the US tax less.

These changes in income tax thresholds and rates can have a significant impact on individuals' tax liabilities and government revenue.


Related Articles

Scotland Times
UK Island Orkney council to look at proposals to become territory of Norway
Woman Awarded Over £100,000 After Being Fired for Transgender Tweet
A provocative study suggests: Left-Wing Extremism and its Unsettling Connection to Psychopathy and Narcissism
A Real woman
Brand new security footage has just been released to the public showing the Active shooter Audrey Elizabeth Hale drove to Covenant Church School in her Honda Fit this morning, parked, and shot her way into the building
China's foreign ministry branch in Hong Kong urges British gov't to stop the biased and double standards Hong Kong report
Double standards: UK lawmakers attack EU chief over Ireland claims
Democracy? Not for UK. UK PM rejects Scottish independence referendum, cancel democracy in BVI
UK urged to brace for economic storm
Women's own body dissatisfaction appears to influence their judgment of other women's body sizes
Prince William To Move Family Into Cottage Near Queen Elizabeth II
BOOOOOOS: Tony Blair receives royal honour
Captured Britons sentenced to death in Ukraine
Barbados PM Mia A. Mottley among Time Magazine’s 100 Most Influential People
Today's headlines
"Just One Of the Boys In School:" Years That Shaped Prince Charles
BVI Premier Rubbishes Claim Of Causing COI Delay
Comments on "Human Intelligence in a Digital Age" - A brilliant Speech by MI6 Chief Richard Moore, and the elephants neglected in the room
Bitcoin: BoE Deputy Gov wants to cancel democracy and protect the banks with regulations which infringe on people’s freedom, independence and benefits they get from their own money.
What are the Pandora Papers?
Taiwan-China relations at their 'worst in 40 years'
The attempt to hold accountable for the content of its clients' websites is like blaming Gutenberg for the NYT's fake news that dragged the US into the pointless war against the nuclear weapons Iraq never had