The income tax is a progressive tax, which ensures that the rate increases as the taxable amount increases.
Depending on where you live in the UK, the tax rates, tax brackets, and tax thresholds also vary. The Scottish Parliament sets its rates and levels for Scotland’s income tax.
Any income above the regular or standard rate band is chargeable or taxed at a higher rate, i.e. currently 40%.
Since the 2018/19 tax year, with a lower starting point, the Scottish Government has run a separate income tax structure comparison with the rest of the UK. It means that, relative to the rest of the UK, Scotland residents pay varying income tax rates, using more tax bands and tax levels.
England, Wales, and Northern Ireland Income tax rates
Income Tax is payable at the following rates in England, Wales, and Northern Ireland:
| Tax Band | Tax Rate |
| Up to £12,500 | 0% {Personal Allowance} |
| £12,501 – £50,000 | 20% {Basic Rate} |
| £50,001 – £1,50,000 | 40% {Higher Rate} |
| Above£1,50,000 | 45% {Additional rate} |
Scottish Income tax rates
| Tax Band | Tax Rate |
| Up to £12,500 | 0% {Personal Allowance} |
| £12,501 – £14,585 | 10% {Starter Rate} |
| £4,586 – £25,158 | 20% {Basic Rate} |
| £25,159 – £43,430 | 21% {Intermediate Rate} |
| £43,431 – £150,000 | 41% {Higher Rate} |
| Over £150,000 | 46% {Top Rate} |
Having a taxable income of £ 50,000 or above, England or Wales residents have to pay taxes at a higher rate of 40 per cent tax on the amount above £50,000.
Scotland residents have to pay up to £150,000 at the higher rate of 41 per cent tax on the amount above £43,430.
The higher tax threshold is the upper limit that a person in that tax bracket will earn per year. Income from work, personal allowance, and income from some other source, such as the interest an individual could receive on savings accounts, constitute a tax threshold.
If a person earns more than £50,001 a year, he will pay a higher rate of 40 per cent tax on everything between £50,001 and £150,000 that he/she earns.
For example
Charlie is single and has an earning of £96,000 (in the higher rate band) and has gross earnings of £8000 for the month.
After deducting his allowance (tax-free), i.e. £1042 (£12,500/12).
The monthly tax payable by Charlie is £6,958
Basic rate tax @ 20% on first £3125 = £625
Higher rate tax @ 40% payable on balance (£3833 @40% =) £1,533.20
Total tax payable by Charlie (£625.00 + £1,533.20 =) £2,158.20