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Higher Rate Tax

The Higher Rate Tax is the tax rate that you pay on the portion of your income between £50,000 to £150,000. The tax rate itself is 40% for this portion of your taxable income.

If you earn over £100,000, you would also have to file a Self Assessment tax return – even if you’re a full-time employee and your employer is already taking care of your taxes through PAYE. This is just one of those random rules.

Also, once you earn over £100,000, your tax-free Personal Allowance decreases by £1 for every £2 that you earn above £100,000.

That means that for your income between £100,000 and £125,000, your tax rate is actually 60%.

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