Higher Rate of Tax

The U.K. tax system taxes different pounds of our income at different rates. Some income is free of tax - the Personal Allowance , a chunk of our income is taxed at the lower rate , another chunk at the basic rate and then the top chunk at the higher rate. The higher rate is set at 40%.

As economists say, the U.K. tax system is a progressive one meaning the more you earn, the more tax you pay.

You may object to the higher rate of tax at 40% but spare a thought for the previous generation - in the 1974/5 tax year, it stood at 83% payable on income of more than £20,000.

Last Updated: April 2008 © Moneyextra.com

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