Most people will look at income tax, national insurance, and possibly dividend tax (as a small business owner). Calculating these from your gross income is slightly complicated, but not too difficult. The only way to calculate your tax rate is by calculating the tax and dividing by your income. If you have the great idea to calculate the tax by multiplying the tax rate by your income, you end up calculating the tax, dividing by your income, and multiplying by your income. But let’s do the income tax first.
There is a threshold: it is currently £12,570. If your income is above £100,000 the threshold is reduced by one pound for every two pound additional income until it is zero.
Income tax falls in four brackets: None, low (20%), high (40%) and very high (45%). Income up to the tax threshold is no tax. The next £37,700 is low tax, then up to £150,000 is high tax, and above £150,000 is very high.
Dividend tax (important if you own a small business): You add the dividends to the four tax brackets until they are filled up. Then you pay nothing (below the threshold), 8.75% (low), 33.75% (high) and 39.35% (very high) dividend tax, except the first £2,000 that you would pay tax for is free.
National insurance: From July, you pay 13.25% on income from £12,570 to £50,270, and 3.25% for income above £50,270.
You add these numbers to get your total tax payments. Divide by your income to get your tax rate. For your marginal tax rate, that’s the tax rate in the highest tax bracket you fall into, same with NI, plus 20% for income from £100,000 to £125,140 because you lose your tax threshold goes down, and you may lose money for your first pounds of dividends possibly moving into a higher tax bracket.
It’s probably easier to just calculate your tax for income X and income X+100 and the difference is your marginal tax rate at income X.