Key Points
- ✓20% tax rate on income £12,571-£50,270
- ✓Most UK taxpayers (about 85%) are Basic Rate Tax payers
- ✓Applies after Personal Allowance is used
- ✓Combined with National Insurance, effective rate is around 32%
- ✓Different rates apply in Scotland
Detailed Explanation
Basic Rate Tax is the first band of Income Tax you pay on earnings above your Personal Allowance. In 2024/25, it's charged at 20% on income between £12,571 and £50,270.
This is the rate most UK taxpayers pay on the majority of their earnings. Around 85% of taxpayers are Basic Rate Tax payers, meaning their highest rate of tax is 20%.
Basic Rate Tax applies after your Personal Allowance has been used. So if you earn £30,000 per year, you'd pay 0% on the first £12,570 (Personal Allowance), then 20% on the remaining £17,430.
National Insurance is charged separately on top of Income Tax. As a Basic Rate Tax payer, your combined marginal rate is around 32% (20% tax + 12% NI) on earnings between the NI threshold and £50,270.
Scotland has different rates - they have a Starter Rate of 19% and a Basic Rate of 20%, with different thresholds that mean some Scottish taxpayers pay slightly more or less than those in the rest of the UK.
Practical Examples
- •Earning £35,000 gross: After £12,570 Personal Allowance, you pay 20% on £22,430 = £4,486 Income Tax for the year
- •A part-time worker earning £15,000 pays 20% on just £2,430 (income above Personal Allowance) = £486 tax
- •Someone earning exactly £50,270 (the top of Basic Rate Tax band) pays £7,540 in Income Tax (20% × £37,700)
Frequently Asked Questions
Related Terms
Income Tax
A progressive tax on your earnings, charged at 20%, 40%, or 45% depending on your income level (after personal allowance).
Personal Allowance
The amount of income you can earn tax-free each year (£12,570 for 2024/25), reduced if you earn over £100,000.
Higher Rate Tax
Income Tax charged at 40% on income between £50,271 and £125,140 (2024/25).
National Insurance (NI)
Mandatory contributions that fund State benefits including the State Pension, charged at different rates for employees, employers, and self-employed.
Tax Code
A code used by employers to calculate how much tax to deduct from your pay, usually starting with a number (e.g., 1257L).