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Tax Rates 2014/15

Break down what the taxman gets
Tax rates

Nothing's as certain as death and taxes. Yet while there's no doubt we'll all be taxed, the rates can change rapidly. Will you pay 20% or will you end up in the 40% tax bracket?

This is an updated guide for the tax year starting 6 April 2014 - use it together with the Income Tax Checker tool.

What's my personal allowance?

Don't get squashed by the tax man

Each of us has a 'personal allowance', which denotes the amount we can earn without paying any income tax. If you earn more than your personal allowance, then you pay tax at the applicable rate on all earnings above the personal allowance, but the allowance remains untaxed. Your specific personal allowance depends on your age and, in some cases, your salary.

What's my 2014/15 personal allowance?
Age Earning bracket 2014/15 personal allowance
Born after 5th April 1948 Under £100,000 £10,000
£100,000 to £120,000 Decreases from £10,000 by £1 for every £2 you earn, until it reaches £0
Over £120,000 £0
Born between 6th April 1938 and 5th April 1948 Under £27,000 £10,500
£27,000 and £28,000 Decreases from £10,500 by £1 for every £2 you earn, until it reaches £10,000
£28,000 and £100,000 £10,000
£100,000 to £120,000 Decreases from £10,000 by £1 for every £2 you earn, until it reaches £0
Over £120,000 £0
Born before 6th April 1938 Under £27,000 £10,660
£27,000 to £28,320 Decreases from £10,660 by £1 for every £2 you earn, until it reaches £10,000
£28,320 to £100,000 £10,000
£100,000 to £120,000 Decreases from £10,000 by £1 for every £2 you earn, until it reaches £0
Over £120,000 £0
Extra allowances
Are you blind?
Your personal allowance + £2,230

If you are married, and one partner was born before 6 April 1935, then you get an extra married couples' allowance.

10% of this allowance is then subtracted from your annual income tax. If you were married before 5 December 2005, it is automatically worked out using the husband's salary. For couples married on or after 5 December 2005, it uses the highest earner's salary.

Born 6 April 1935 or before - married couples' allowance?
Salary 2014/15 married couples' allowance
Under £28,320 £8,165
Between £28,320 and £38,370 Decreases from £8,165 , by £1 for every £2 you earn until it reaches £3,140
Over £38,370 £3,140
Once you know your allowance, work out 10% of it. You will receive this amount in tax relief.

What income tax band am I in?

Once you know your personal allowance, anything extra earned will be subject to income tax. For the 2014/15 tax year, there are three marginal income tax bands, including the 40% tax bracket and the 45% 'additional rate' bracket (also remember your personal allowance starts to shrink once earnings hit £100,000).

What is my income tax rate?
Earnings 2014/15 rate
Under your personal allowance (PA)
For most, £10,000
No income tax payable
Between PA and PA+£31,865
For most, £10,000 to £41,865
Between PA+£31,866 and £150,000
For most, £41,866 to £150,000
Over £150,000 45%

Marginal bands mean you only pay the specified tax rate on that portion of salary. For instance, if your salary puts you in the 40% tax bracket (over PA+£31,865), then you only pay 40% tax on the segment of earnings in that income tax band. For the lower part of your earnings, you'll still pay the appropriate 20% or 0%.

What's national insurance?

In addition to plain old income tax, most UK workers also have national insurance contributions deducted from their pay. These kick in based on your earnings from the age of 16, and you stop paying when you reach state retirement age.

What's my national insurance rate?
Earnings National insurance rate 2014/15 (For employed, NOT self-employed)
Per week Annual salary
Under £153 Under £7,956 No national insurance payable
£153 - £805 £7,956 - £41,865 12% on everything earned between £153-£805/week
Over £805 Over £41,865 12% on everything earned between £153-£805/week, 2% on everything above that
Some advanced national insurance rules, particularly for the self-employed, are very complicated. See the HMRC website for full rates.

Capital gains tax

Capital gains is the least common tax on income, and for many it won't apply. However, if you sell or give away an asset worth more than £6,000, you could have to pay CGT. It doesn't apply for main homes, cars or lottery/pools winnings, among other things.

Each year, individuals have an annual exemption amount that allows them to receive some gains tax-free. Above this, you pay capital gains tax on all gains.

Capital gains tax in 2014/15
Annual exemption amount £11,000 for individuals
Standard capital gains tax rate 18%
Higher capital gains tax rate 28%
Your rate of capital gains tax will depend on your other taxable income. See the HMRC website for more on how to work this out.

Paying into a pension?

Pension payments get very complex indeed, yet the basic thing to remember is that most people don't have to pay tax on the money they pay into their pension via their employer's PAYE system. Instead, the tax relief is used to top up your pension contributions.

Nest egg

If you aren't a taxpayer, then you'll be given an extra £20 for every £80 you pay into a pension up until you've contributed £2,880. This means the Government top up your pension to £3,600.

However, there are some limits on the amount of tax-free contributions you can make (both in a year and over your lifetime).

Pension contribution limits 2014/15
Annual tax-free contribution limit £40,000
Lifetime tax-free allowance £1,250,000