Are there any in-between tax bands or would my income tax be either 0,20,40 or 45% ?

If (in 17/18) I make 44999 a year my tax would be ~9000 but if I make £2 more at 45001 my tax is now ~18000 ?


3 Answers 3


You've completely misunderstood the system. Higher tax rates are only payable on the marginal income above the threshold, not on all income. If your income is £45,001 and the higher-rate threshold is £45,000 then you only pay 40% on £1 of your income. The rest is taxed at 0% and 20%.

  • 34
    I wish more people understood this. If it worked the way the question suggested, a small pay rise could cause you to end up with much less money. The banding system is specifically designed the way this answer describes so that that can't happen. Mar 29, 2017 at 13:44
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    There are plenty of newspapers that mislead people about this, unfortunately. The only situations where earning a little bit more loses you money are in the benefits system, not taxation.
    – pjc50
    Mar 29, 2017 at 15:08
  • 17
    @anaximander: While it's indeed colossally stupid to have such a system, it's not rare either. This is especially the case in welfare states, where means-tested subsidies suddenly stop. Assuming a rational system of income redistribution is not empirically justified.
    – MSalters
    Mar 29, 2017 at 17:45
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    @Mehrdad Anybody who understands the question and understands this answer will understand that the question has been answered. It really isn't necessary to add extra text. Mar 30, 2017 at 9:51
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    @IainGalloway I'd forgotten about stamp duty, but it turns out to have been recently fixed: gov.uk/stamp-duty-land-tax/residential-property-rates
    – pjc50
    Mar 30, 2017 at 10:32

Warning, if you earn between £100k and ~£120k then you will pay 62% marginal tax. Let me break this down. There is 40% for that band but then there is the withdrawal of your personal allowance at half speed meaning an extra 20% in the said band. Then there is 2% Employees National Insurance (NI) on high incomes.

Come to mention it, you haven't reference National Insurance (NI) at all. The NI bands shadow the Income Tax bands. So if you land in the 20% Income Tax band then you also have to pay ~13% Employee NI, this assumje that you are employed and not taking income as dividends from a company (even then rules apply (IR35)).

Anyway, there are plenty of UK tax and NI calculators, top of list is this one The Salary Calculator. It looks good enough.

  • 6
    Not being in a generous mood today, I'd say that British politicians are exceedingly bad at maths.
    – gnasher729
    Mar 29, 2017 at 18:50
  • @gnasher729 I think you're giving all other politicians and undeserved break. A politician who is not exceedingly bad at math is rare, on the other hand I'm not sure they are much worse than the average populace. It's just that I would expect them to hire someone who has the necessary skills as most of the rest of the populace does (e.g. tax accountants).
    – DRF
    Mar 31, 2017 at 11:53
  • @gnasher729 Policy has to be complex to keep the lawyers and accountants in jobs.
    – Brendon
    Apr 3, 2017 at 17:56
  • Whenever politicians talk about taxing the rich, what they really mean is taxing the upper middle classes. The upper middle classes are an easy target because most normal people regard them as rich, but their income is mostly earned income so they can't easilly offshore it or hide it in shell companies like the truely rich can. Jan 14, 2020 at 15:12
  • Another good UK tax and salary calculator is this one here
    – train
    Feb 16, 2022 at 1:58

Your tax rate is a lot lower than you assumed.

In 2017/18, the first £11,500 of income are tax free. For the next £33,500 from £11,500 to £45,000 you pay 20% tax. For the next £55,000 from £45,000 to £100,000 you pay 40% tax. Above that it gets a bit complicated...

If you make £45,000 then £11,500 is tax free, and you pay 20% of £33,500 = £6,700 tax. If you make £45,001 then you add 40% of £1 to that, which makes it £6,700.40.

However, you also pay employee national insurance of 12% on income from £8,164 to £45,000 and 2% on income above that. That is £4,420 for the income up to £45,000, and two pence for the next pound.

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    I'd phrase it as "your overall tax rate". The marginal tax rate is also important when considering things like pension contributions or ISA savings. (If you earn £45001, but put £1 into a pension, that £1 in your pension fund has only cost you 60p. Similarly, if you earn £45000, it's particularly worthwhile to keep your savings in an ISA - because otherwise you have to pay 40p tax on every £1 of interest.) Mar 30, 2017 at 7:21

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