FundRobot » Pension Funds » What % of your yearly income goes to tax in the UK?

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Old   #1 (permalink)
 
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Default what % of your yearly income goes to tax in the uk

e.g. if you're earning 25k, 35k or 55k a year? How much of those salaries will be deducted for tax?

When you earn more is there more tax?

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Old   #2 (permalink)
 
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Default what % of your yearly income goes to tax in the uk

Google "uk income tax" and the tax free allowances and % rates for a given salary are given in full.
We also pay national insurance for our health service. Our health service is not free as many people think. We do not pay as we use the service but we do pay in the form of national insurance. This is approx11% of our salary above a tax free amount. Again full details on google.
We also pay value added tax of 20% on most purchases. Necessities such as food are exempt from VAT.
We pay council tax to local councils for local services, such as refuse collection and street lamps, which is based on the value of our properties.
As if all that were not enough we also pay excise duty on items such as petrol and alcohol.
It's amazing how we have any cash left to eat.
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Default what % of your yearly income goes to tax in the uk

A useful rough rule of thumb for a person on average wages is that a quarter is deducted for income tax and National Insurance. That goes up as you earn more - once you're earning over about 40k, income tax on any extra is 40% rather than 20%. The very top rate is 45%. This is progressive taxation, the idea that the more you earn, the more you should be able to afford to pay, so the rate goes up so that you do. Conversely, if you are a very low earner, you pay nothing.

As the first answer says, then there is tax on what you spend - VAT, excise duty on petrol, alcohol and tobacco, and then there is council tax.

The first answer is incorrect about National Insurance. It doesn't pay for the health service, it pays for social security benefits and the state pension, that you have to have paid NI to qualify to get. The National Insurance Fund accounts show this.
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Default what % of your yearly income goes to tax in the uk

You get your personal allowance tax free over the year.
basic rate is then 20%
Higher rate is 40%
See gov.uk/taxes for the bands

Also remember that National Insurance Contributions must be paid.
Free official calculator on gov.uk.
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