Britons ‘face stealth income tax rise’ to plug £50bn fiscal hole

What is the 20 percent tax bracket?

Also known as the basic rate bracket, the 20 percent tax is applied to earnings from £12,571 to £50,270.

What is the 40 percent tax bracket?

The 40 percent tax bracket, also know as the higher rate, is applied to earnings from £50,271 to £150,000.

What is the 45 percent tax bracket?

The 45 percent tax bracket, known as the additional rate, is applied to earnings over £150,000.

People can work out how much income tax they pay. To do so, they should split their annual salary out into these bands.

For example, if a person was to earn an annual salary of £30,000, they’d just be paying the basic rate tax.

This means £12,570 of their earnings will be tax-free (personal allowance), but the remaining £17,430 will fall into basic rate, of which they’ll be taxed 20 percent of it.

However, if a person were to earn an annual salary of £55,000, they’d be paying both the basic rate and the higher rate of tax on their earnings.

This means, as above, £12,570 of their earnings would be tax-free, earnings from £12,570 to £50,271 (£37,701) will be taxed 20 percent, and the remaining £4,729 will be taxed 40 percent.

National Insurance tax

While the Chancellor reversed nearly all of Ms Truss and Mr Kwarteng’s mini-budget tax cuts, it’s been confirmed their reversal of Mr Sunak’s 1.25 percent National Insurance increase will remain in place.