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The <\/span>income tax<\/b> rates in the 2025\/26 tax year \ud83d\udc47<\/span><\/p>\n\n\n\nIncome<\/strong><\/td>\nTax rate<\/strong><\/td>\nTax band<\/strong><\/td>\n<\/tr>\n\nUp to \u00a312,570<\/span><\/td>\n 0%<\/span><\/td>\n Personal allowance<\/span><\/td>\n<\/tr>\n\n\u00a312,571 to \u00a350,270<\/span><\/td>\n 20%<\/span><\/td>\n Basic rate<\/span><\/td>\n<\/tr>\n\n\u00a350,271 to \u00a3125,140<\/span><\/td>\n 40%<\/span><\/td>\n Higher rate<\/span><\/td>\n<\/tr>\n\nover \u00a3125,141<\/span><\/td>\n 45%<\/span><\/td>\n Additional rate<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n <\/div>\n<\/div> \n\n\n\n\n\n\n\n
Why do you file a tax return?<\/h2>\n\n\n\n Great question. Get ready to sink your teeth into the answer. <\/p>\n\n\n\n
In true HMRC fashion, there\u2019s an extra and expensive layer of confusion when it comes to taxing high-earners. <\/p>\n\n\n\n
As you may (or may not) know, you\u2019re usually taxed on multiple tax rates at once. These multiple rates account for different portions of your income. Check out the image below to see a visual of what we mean by this. <\/p>\n\n\n
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When you earn \u00a3100k+ and start to lose your personal allowance, each tax-free \u00a31 you lose becomes \u00a31 of income that needs to be taxed. But – horror – it\u2019s taxed at both 20% (the basic rate) and 40% (the higher rate). This gives it a whopping 60% total \ud83e\udd2f<\/p>\n\n\n\n
You therefore may need to file a tax return to make sure that this is being done correctly and that you don\u2019t owe<\/em> HMRC any money. Yes, you read that right. <\/p>\n\n\n\n\u00a3100k+ = PAYE only income?<\/h2>\n\n\n\n OK, stay with us. This might be a little confusing.<\/p>\n\n\n\n
From April 2023, you had to file a tax return if you earned \u00a3150k+ in a tax year. This didn’t only come from PAYE income though. It could also be made up by self-employed income, property income, investment income etc. <\/p>\n\n\n<\/div> \n\n
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Who needs to file a tax return?<\/h2>\n With the \u00a3150k threshold, you’d have to do a tax return if you earned:<\/p>\n
\n\u00a3150k from an annual salary \u2705<\/li>\n \u00a3101k from an annual salary \u274c<\/li>\n \u00a3101k from an annual salary, plus rental income \u2705<\/li>\n \u00a330k from an annual salary, plus \u00a32k from self-employment \u2705<\/li>\n \u00a3101k from rental income and freelancing work \u2705<\/li>\n<\/ul>\nBut from 2024\/25, you only file a tax return if your income comes from multiple streams. If you earn \u00a3150k+ but it’s all from PAYE, you don’t file a tax return anymore. Woohoo!<\/p>\n\n <\/div>\n<\/div> \n\n
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What\u2019s your adjusted net income?<\/h2>\n\n\n\n Your adjusted net income is a fancy way of saying your total taxable income. Generally, this doesn\u2019t include allowances or tax reliefs. But it does when it comes to the personal allowance. Classic.<\/p>\n\n\n\n
As a result, the tax return that high-earners do is essentially to make sure that your adjusted net income is correct. Which it often isn\u2019t on this salary! <\/p>\n\n\n\n
If your tax return reveals that you owe money to HMRC, you pay this before the tax return deadline on 31st January. HMRC will also change your tax code to reflect the correct taxing of your PAYE income. <\/p>\n\n\n\n
If you want to work out whether your tax code is right for your income, check out our tax code checker.<\/p>\n\n\n
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Tax year 2024\/25<\/span> \u25bc<\/span><\/button><\/div><\/div><\/div>