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PERSONAL TAX ESSENTIALS
Personal allowance
Each individual is entitled to his or her own personal allowance (PA) of £12,570 for 2022/23. The PA reduces an individual’s taxable income. For those with income in excess of £100,000, the allowance is restricted.
After reducing income by the PA a series of rate bands are assigned first to your non-savings (this may include income from wages, self-employment, property income and pensions), then to your savings income, and finally to any dividend income.
Income tax rates for 2022/23
Non-savings income for English and Northern Irish taxpayers is taxable as follows:
Scottish taxpayers
However, the following rates and bands apply for Scottish taxpayers (on non-savings and non-dividend income):
Rates that apply across the UK
Savings income
The Personal Savings Allowance (PSA) applies to income such as bank and building society interest. The allowance applies for up to £1,000 of a basic
rate taxpayer’s savings income, and up to £500 of a higher rate taxpayer’s savings income each year. The allowance is not available to additional rate taxpayers.
In addition to the PSA, some taxpayers benefit from the starting rate for savings, which taxes £5,000 of savings income at 0%. This is not available if the taxable non-savings income exceeds the starting rate band.
Band £
Band Name
Rate %
0 - 2,162
Starter
19
2,163 - 13,118
Basic
20
13,119 - 31,092
Intermediate
21
31,093 - 150,000
Higher
41
Over 150,000
Top
46
Band £
Rate %
0 - 37,700
Basic rate (BR)
20
37,701 - 150,000
Higher rate (HR)
40
Over 150,000
Additional rate (AR)
45
Welsh taxpayers
The National Assembly for Wales has the right to vary the rates of income tax payable by Welsh taxpayers. The Welsh rate of income tax has been set at 10% and is added to the UK rates, which are each reduced by 10%. This means that for 2022/23, the tax payable by Welsh taxpayers continues to be the same as English and Northern Irish taxpayers.
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Personal Tax Essentials