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Tax Rates 2018/19

Break down what the taxman gets

Tax Rates
Helen Saxon
Helen Saxon
Updated 18 January 2019

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 the basic rate of 20% or will you end up in the higher rate 40% tax bracket (or 19%, 21% or 41% in Scotland)?

This is a guide for the tax year starting 6 April 2018, including the new Scottish income tax rates - use it together with the Income Tax Checker tool.

In this guide

Free Income Tax Calculator

To check what your take-home pay should be, including pension contributions and student loan repayments, use the free Free Income Tax Calculator.

What's my personal tax allowance?

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.

What's my 2018/19 personal tax allowance?

AGE EARNING BRACKET 2018/19 PERSONAL ALLOWANCE
Any age Under £100,000 £11,850
£100,000 to £123,700 Decreases from £11,850 by £1 for every £2 you earn, until it reaches £0
Over £123,700 £0
Extra allowances
Are you blind? Your personal allowance + £2,390

  • Rates for 2019/20

    As part of the Autumn Budget, the Government announced that the personal allowance and higher rate threshold will increase in 2019/20. 

    From April 2019, the personal allowance will rise to £12,500, and the higher rate threshold will rise to £50,000.

Are you married or in a civil partnership?

If the answer to that is yes and both partners were born on or after 6 April 1935 then you may be entitled to the marriage tax allowance which allows couples to transfer a proportion of their personal allowance between them.

Alternatively, if at least one partner was born before 6 April 1935, then you can get a different married couple's allowance, which, despite its name, is also available to civil partners.

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 couple's allowance 2018/19

SALARY 2018/19 MARRIED COUPLE'S ALLOWANCE
Under £28,900 £8,695
Between £28,900 and £39,570 Decreases from £8,695, by £1 for every £2 you earn until it reaches £3,360
Over £39,570 £3,360
Once you know your allowance, work out 10% of it. You will receive this amount in tax relief. You can use the Government's married couple's allowance calculator to see exactly how much you can get.

What income tax band am I in?

Once you know your personal allowance, anything extra earned will be subject to income tax. For the 2018/19 tax year, if you live in England, Wales or Northern Ireland, there are three marginal income tax bands - the 20% basic rate, the 40% higher rate and the 45% additional rate tax bracket (also remember your personal allowance starts to shrink once earnings hit £100,000).

If you live in Scotland, there are five marginal income tax bands from the 2018/19 tax year - the starter rate of 19%, the 20% basic rate, the 21% intermediate rate, the 41% higher rate, and the 46% additional rate.

What is my income tax rate 2018/19?

EARNINGS (IF YOU LIVE IN ENGLAND, WALES OR NORTHERN IRELAND) 2018/19 RATE
Under your personal allowance (PA)
For most, £11,850		 No income tax payable
Between PA and PA+£34,500 (basic rate)
For most, £11,850 to £46,350		 20%
Between PA+£34,500 and £150,000 (higher rate)
For most, £46,350 to £150,000		 40%
Over £150,000 (additional rate) 45%

What is my income tax rate 2018/19?

EARNINGS (IF YOU LIVE IN SCOTLAND) 2018/19 RATE
Under your personal allowance (PA)
For most, £11,850		 No income tax payable
Between PA and PA+£2,000 (starter rate)
For most, £11,850 to £13,850		 19%
Between PA+£2,000 and PA+£12,150 (basic rate)
For most, £13,850 to £24,000		 20%
Between PA+£12,150 and PA+£31,580 (intermediate rate)
For most, £24,000 to £43,430		 21%
Between PA+£31,580 and £150,000 (higher rate)
For most, £43,430 to £150,000		 41%
Over £150,000 (additional rate) 46%

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+£34,500 in 2018/19 unless you live in Scotland), 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%.

Do you submit self-assessment tax returns?

The deadline for submitting your online self-assessment tax return is fast approaching. You only have until Thurs 31 Jan to file it - and if you didn't do one last year, you need to give yourself an extra twenty working days to register, so don't leave it too late!

You'll need your records, such as bank statements or receipts, in order to do this. 

  • What happens after I've filed my tax return?

    Once you've filed your return, you will receive your tax bill. If you did a paper return, you'll receive it by post.

    If you did an online return, you have two opportunities to view your bill:

    • Before you submit your return (in the 'View my calculation' section)
    • After you've submitted your return, in your final tax calculation. Beware it can take up to 72 hours for this to show on your account.

    What you owe will be referred to as the 'balancing payment' on your bill. If you made any payments last year towards this year's bill, you'll need to deduct that from your balance to work out what you owe.

    You must pay your self-assessment tax bill by 11:59pm on Thurs 31 Jan. 

  • Can I get help to file my tax return?

    If you need help filling in your self assessment return, you can:

    • Appoint someone to help you (such as an accountant or a friend)
    • Watch HMRC's instructional videos on how to complete an online tax return
    • Contact HMRC for help online or by telephoning 0300 200 3310. 

When are the self-assessment tax return deadlines?

When your tax return's due depends on how you're doing your return.

  • If you're doing a paper tax return, the deadline was Wednesday 31 October 2018.
  • If you're doing an online tax return, the deadline is Thursday 31 January 2019. 

Make sure you don't miss the deadline as you will be fined £100 if you do.  If you're over three months late, it'll be even more. 

Other tax-free allowances

Since April 2016, your savings interest has been paid to you tax-free, and the personal savings allowance (PSA) has come into play. The PSA means every basic-rate taxpayer can earn £1,000 interest per year without paying tax on it. Higher rate payers get a £500 allowance, and additional raters don't get an allowance.

If you're a low earner, there's another tax-free allowance you get called the starting savings rate. This enables you to earn another £5,000/yr in savings interest tax-free if you earn less than £11,850/yr. For every pound you earn above this threshold, you lose a pound of savings allowance. For more on this see our Tax-free Savings guide.

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 usually stop paying when you reach state pension age.

What's my national insurance rate 2018/19?

EARNINGS   NATIONAL INSURANCE RATE 2018/19 (FOR EMPLOYED, NOT SELF-EMPLOYED)
Per week Annual salary  
Under £162 Under £8,424 No national insurance payable
£162 - £892 £8,424 - £46,350 12% on everything earned between £162-£892/week
Over £892 Over £46,350 12% on everything earned between £162-£892/week, 2% on everything above that
Some advanced national insurance rules are very complicated. See the HM Revenue & Customs (HMRC) website for full rates.

What if I'm self-employed?

The national insurance rules if you're self-employed are more complicated than those for employees. You usually pay two sorts of national insurance contributions (NICs) - class 2 and class 4.

NICs are paid on profits you make, which are calculated by deducting your expenses from your self-employment income, above a certain threshold. Most self-employed people pay national insurance through self-assessment.

What are my class 2 NICs 2018/19?

PROFITS (PER YEAR) CLASS 2 NIC RATE 2018/19 (FOR SELF-EMPLOYED, NOT EMPLOYED)
Under £6,205 No national insurance payable
Over £6,205 £2.95 per week
Some advanced national insurance rules are very complicated. See the HMRC website for full rates.

What are my class 4 NICs 2018/19?

PROFITS (PER YEAR) CLASS 4 NIC RATE 2018/19 (FOR SELF-EMPLOYED, NOT EMPLOYED)
Under £8,424 No national insurance payable
£8,424 - £46,350 9% on everything earned between £162-£892/week
Over £46,350 9% on everything earned between £162-£892/week, 2% on everything above that
Some advanced national insurance rules are very complicated. See the HMRC website for full rates.

Voluntary national insurance contributions

If you have gaps in your national insurance record, for example because you earned less than the NI threshold or were living abroad, it could mean that you don't qualify for the full state pension.

If you want to fill these gaps, you may be able to pay voluntary class 3 NICs - and can usually fill gaps for the past six tax years. For more information see our State Pensions guide.

What are my class 3 NICs 2018/19?

RATE PER WEEK RATE PER YEAR
£14.65 £762
Some advanced national insurance rules are very complicated. See the HMRC website for full rates.

Capital Gains Tax

Capital gains tax (CGT) is one of the least common taxes 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 CGT on all gains.

Capital Gains Tax in 2018/19

Annual exemption amount £11,700 for individuals
Standard CGT rate 18% on residential property, 10% on other assets
Higher CGT rate 28% on residential property, 20% on other assets
Your rate of CGT will depend on your other taxable income. See the HMRC website for more on how to work this out.

If you give or sell assets to your spouse or civil partner, you won't have to pay CGT, unless:

  • You separated and didn't live together during that tax year
  • The assets you gave them were sold on via their business

It's worth giving or selling your assets to your spouse or civil partner if you'll exceed the personal allowance of £11,700, but your partner won't. That way, neither of you will need to pay CGT.

If they later sell the asset

Your spouse or civil partner may have to pay tax on any gain if they later dispose of the asset.

Dividend tax

There are two ways you make money from investing. One is when the shares increase in value and then you reap a nice profit when you sell them. The other is when they pay dividends.

Dividends are a bit like interest on a savings account. If a company makes a profit, it gives some of it back to you - it could be on a regular basis or as a one-off. And just as you have a personal savings allowance for tax-free interest on savings, you also have a tax-free dividends allowance.

Since 6 April 2018, you've been able to receive £2,000 of tax-free dividends per tax year.

Any dividends received above this allowance are taxed at the rates shown below, unless your shares are held in a stocks & shares ISA (where dividends are always tax free):

Dividend tax

TAX BRACKET 2018/19 RATE
Basic-rate 7.5%
Higher-rate 32.5%
Additional-rate 38.1%

If you earn more than £2,000 per year in dividend income outside of a stocks & shares ISA you'll need to inform HMRC.

Pension contribution limits 2018/19 & 2017/18

Annual tax-free contribution limit £40,000 £40,000
Lifetime tax-free allowance £1,030,000 £1,000,000

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.

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 tops 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).

Note that if you have an annual income of over £150,000 this annual allowance will be reduced (in 2018/19).

If you use pension freedom rules to access your pension pot, then your annual allowance will drop to £4,000 for that year.

To check what your take-home pay should be, including pension contributions and student loan repayments, use the free Income Tax Checker

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Tax Rates 2018/19

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