British Tax Percentage: What You Need to Know
1. Income Tax Rates (2024/25)
In the UK, income tax is paid on your earnings from employment, self-employment, pensions, and rental income. The amount you pay depends on how much you earn.
| Band | Taxable Income | Tax Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 – £50,270 | 20% |
| Higher Rate | £50,271 – £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
Note: The personal allowance reduces by £1 for every £2 earned over £100,000.
2. National Insurance Contributions (NICs)
NICs are paid by employees, employers, and the self-employed to fund state benefits such as the NHS and pensions.
For Employees (Class 1):
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12% on earnings between £12,570 and £50,270.
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2% on earnings above £50,270.
For Self-Employed:
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Class 2: Flat rate of £3.45 per week.
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Class 4: 9% on profits between £12,570 and £50,270, and 2% above that.
3. Value Added Tax (VAT)
VAT is charged on most goods and services sold in the UK.
| VAT Type | Rate | Applies To |
|---|---|---|
| Standard Rate | 20% | Most goods and services |
| Reduced Rate | 5% | Home energy, children’s car seats, etc. |
| Zero Rate | 0% | Food, books, children's clothing |
Businesses with a turnover of over £85,000 must register for VAT.
4. Corporation Tax
As of April 2025, the main corporation tax rate is 25% for companies with profits over £250,000. Smaller companies with profits below £50,000 pay a small profits rate of 19%, and there's a tapered rate in between.
5. Capital Gains Tax (CGT)
You may be taxed on the profit when you sell (or ‘dispose of’) something that’s increased in value, like property or shares.
| Asset Type | Basic Rate Taxpayer | Higher/Additional Rate |
|---|---|---|
| Most assets | 10% | 20% |
| Residential property | 18% | 28% |
Annual CGT allowance for 2024/25 is £3,000.
6. Dividend Tax Rates
Dividends from shares also have a tax-free allowance.
| Band | Tax Rate on Dividends |
|---|---|
| Basic Rate | 8.75% |
| Higher Rate | 33.75% |
| Additional Rate | 39.35% |
The dividend allowance is £500 for the 2024/25 tax year.
7. Council Tax
Council tax varies depending on your property’s valuation band and local authority. The average annual bill in 2025 for a Band D property in England is around £2,065.
Final Thoughts
The UK tax system may appear complex, but staying informed about the key tax rates and thresholds can help you plan better — whether you’re an employee, a business owner, or a landlord. It’s always wise to consult with a tax adviser or accountant to ensure you're compliant and making the most of available reliefs and allowances.
If you need help managing your UK taxes or understanding your obligations, reach out to a certified tax professional for tailored advice.