Tax bands and rates
In this lesson, you'll learn how the UK income tax system works as a progressive tax, where your tax rate increases as your income rises.
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In this lesson
- 0:00 Understanding progressive tax bands
- 0:32 Tax rates across basic, higher, and additional bands
- 1:12 Personal pension contributions and starting rate band
- 2:01 Savings and dividend nil rate bands explained
About this lesson
You'll discover the three main tax bands—basic rate (up to £37,700), higher rate (up to £125,140), and additional rate (above that)—and the specific rates applied to non-savings income, savings income, and dividends in each band. The video also covers how personal pension contributions extend your basic rate band, and crucially, the nil rate bands for savings and dividends that every taxpayer needs to understand to calculate tax accurately. This is essential knowledge for the Taxation paper, where you'll regularly calculate income tax liabilities and need to apply the correct rates and allowances. Understanding these bands and how they interact with nil rate bands will help you avoid common errors and answer exam questions with confidence.
Duration: 3m
Transcript
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