Back

⚠️ Hey, you are using an outdated web browser.
TaxScouts might not work with your browser. Upgrade here

Let us sort your Self Assessment online. £119, all in. Learn more

Basic tax rate

The basic tax rate (BR) is the rate of Income Tax that you pay when you earn between £12,501 and £50,000. This rate is accurate as of the 2020/21 tax year

How much is the basic tax rate?

If you pay BR tax, you’re liable to pay 20% Income Tax in England and Wales. 

How does it work?

You only pay tax on your taxable income. Yes, it sounds obvious, but it can be a little confusing at first. Take a look at the current rates of Income Tax:

Income Tax rate
Up to £12,500 0% Personal allowance
£12,501 to £50,000 20% Basic rate
£50,000 to £150,000 40% Higher rate
over £150,000 45% Additional rate

Let’s look at an example:

  • If you earn £30,000, you owe 20% on £17,499 of your income
  • If you earn £55,000, you owe 20% on £37,499; 40% on £5,000

Basically, it’s important to remember that you often don’t owe the above tax rates on your income as a whole. It’s only the portion of your income that falls into certain tax brackets. So if you earn, say, £155,000, you’ll be taxed at three different rates: the basic rate, the higher rate and the additional rate.

I earn £155,000 – how am I taxed?
£50,000 20%
£100,000 40%
£5,000 45%

What’s the Personal Allowance?

The Personal Allowance is the income that you can earn tax-free in the UK. That means that when you earn less than £12,500, you aren’t liable to pay Income Tax. You may also be wondering why the Personal Allowance is missing from the above table. That’s because when you earn £100,000 and more, you gradually start to lose your tax-free Personal Allowance, pound by pound. 

When you earn more than £125,000, you lose your entitlement to the Personal Allowance entirely.

Hey there! We really hope this article helped you. Tax matters can be a dreadful topic at times. We know. That's why we started TaxScouts.
A stress-free way to getting your taxes done.

Have a minute? See how it works

More guides & useful information

Related terms

Let us sort your Self Assessment online. £119, all in.

That’s right. No matter how complicated it gets or why you need to do a return in the first place, it’ll cost £119 to get it done. That includes VAT, last-minute changes and all the support you may need.

How TaxScouts works

Answer a few simple questions

And we mean a few. After a couple of minutes of answering questions online we’ll have everything we need to start preparing your tax return.

Then get paired with a tax return accountant

That’s right, you’ll be matched with a real certified accountant who is best suited to prepare your return. Plus, they’re on hand for questions whenever you need.

We file your Self Assessment for you

Once you’ve signed off your return, your TaxScouts accountant will submit your return with HMRC for you.

That’s it! We told you it was simple.