Q. What are the income tax bands? How have they changed?
Q. What are the income tax rates? How have they changed? Q. How have these bands and rates affected the distribution of income tax contributions? |
SOURCES
HMRC. Rates of Income tax (tax year 1990 to 1991, to tax year 2019 to 2020). Published 28 March 2014. Last updated 5 April 2019 https://www.gov.uk/government/statistics/rates-of-income-statistics HMRC. Income Tax personal allowances and reliefs (tax year 1990 to 1991, to tax year 2019 to 2020). Published 28 March 2014. Last updated 5 April 2019 https://www.gov.uk/government/statistics/income-tax-personal-allowances-and-reliefs ONS. Consumer price inflation time series (MM23). Release date 13 February 2019 www.ons.gov.uk/economy/inflationandpriceindices/timeseries/d7g7/mm23 |
Income tax bands
Income Tax Bands |
Thresholds for Tax Year 2019-20 |
Tax Rate |
Personal Allowance: no income tax applied on pay up to |
£12,500 |
0% |
Basic Rate income tax applied on pay between |
£12,500 - £50,000 |
20% |
Higher rate income tax applied on pay between |
£50,000 - £150,000 |
40% |
Additional Rate income tax applied on pay above |
£150,000 + |
45% |
The UK income tax system has several 'Tax Bands' with varying 'Tax Rates' that are applicable on any income within a certain 'band' and above the 'Personal Allowance', which is tax-free.
The 'Personal Allowance' increased steadily between 1990-91 and 2007-08; just above the inflation rate. Then, from 2008-09 onwards, it has increased significantly to be more than 300% more than the baseline. |
Between 1990-91 and 2018-19, this 'Personal Allowance' threshold for tax-free income has increased significantly more than inflation (294% compared with 90%).
The threshold when the 'Higher Tax Rate' is applied on income has steadily increased and is now in line with inflation (96% compared with 90%). Since the 'Additional Tax Rate' was introduced in 2010-11, the threshold for when this higher rate is applied has remained the same; at £150K. |
Income tax rates
In 2008-09, the 'Lower Tax Rate' was removed and in 2010-11 the 'Additional Tax Rate' was added at 50% tax on income above £150K. This was decreased to 45% in 2013-14.
The 'Basic Tax Rate' decreased between 1995-96 and 2008-09 from 25% to 20%, and has since remained at this percentage. Whereas the 'Higher Tax Rate' has remained at the same percentage since 1990-91 (40%). |