June, 2013

How many people pay the same tax as you?

iStock_000013013928SmallWhat rate of income tax do you pay?

Are you a low earner who pays no tax as you earn less than the Personal Allowance? Are you one of the majority who pay the basic rate of tax? Or, have the Chancellor’s recent tax changes pulled you into the higher or additional rate tax band?

Here, we look at the tax bands for 2013/14 and we reveal how many UK taxpayers are in the same income tax band as you.

The tax bands for 2013/14

The tax rate that you pay depends on your income. The rates for 2013/4 are:

  • £0 to £9,440 – 0%
  • £9,441 to 41,450 – 20%
  • £41,451 to £150,000 – 40%
  • £150,000 and over – 45%

So, if you earned £50,000 you would pay o% tax on the first £9,440, 20% on the next £32,010 and 40% on the remaining £8,549.

Next, we look at the number of UK taxpayers in each tax band.

How many people are in the same tax band as you?

Over recent years, the number of people paying the higher rate of tax has risen significantly. The Guardian reports that in 1991/92, 24.1 million people paid basic rate tax and 1.6 million paid higher rate, but in 2012/13, 25 million paid basic rate tax and 3.86 million paid higher rate.

In October 2012, the Institute of Fiscal Studies published its survey of the UK tax system. It found that:

“Of a UK adult population of around 51.4 million, it is estimated that there
will be 29.7 million taxpayers in 2012–13. Around 3.8 million of these will
pay tax at the higher rate, providing 36.5% of total income tax revenue,
and 307,000 taxpayers will pay tax at the additional rate, providing 24.6%
of total income tax revenue.”

Online Graphing

And, the number of people in the higher rate tax band is set to increase significantly. It is estimated that an extra 400,000 people will become higher rate taxpayers in the current (2013/14) tax year, bringing the total to a record of 4.3 million people. And, the Institute for Fiscal Studies estimates that the figure could go as high as 5 million over the next three years.

What tax band are you in? Are you expecting to fall into a different band in the next few years? Share your thoughts below.