(Because adulting just got real, and HMRC doesn’t mess around)
So, you’ve landed your first job in the UK — whether it’s a part-time student gig, your first salaried role, or a freelance hustle. The payslip hits your inbox, and suddenly there’s a chunk missing. 🤯 That’s income tax, and trust us, it’s way less scary when you actually understand it.
Here’s a breakdown of UK Income Tax — explained in plain English, minus the financial jargon.
💸 What Is UK Income Tax?
Income Tax is the money the UK government takes from your earnings to fund public services like the NHS, education, roads, and more. It’s not just a random deduction — it’s your contribution to keeping the country running.
But don’t worry — you don’t pay tax on everything you earn.
🧾 What’s the Personal Allowance?
In the UK (2024–25), everyone gets a tax-free allowance called the Personal Allowance, which is currently £12,570 per year. That means you only start paying tax on income above that.
So if you earn:
- £12,000 a year → no income tax
- £20,000 a year → You pay tax only on £7,430 (20% of that)
📊 How Much Tax Will I Pay?
After your allowance, income is taxed in bands(as of 2024-2025):
| Income Range | Tax Rate |
|---|---|
| £0 – £12,570 | 0% (tax-free) |
| £12,571 – £50,270 | 20% (basic rate) |
| £50,271 – £125,140 | 40% (higher rate) |
| Over £125,140 | 45% (additional rate) |
Note: Most first-time earners stay in the basic rate band & the tax rate and slabs keep changing time to time.
🧑💻 PAYE: Pay As You Earn
If you’re employed, your income tax is usually taken automatically through the PAYE system. Your employer does the maths and HMRC gets paid before you even see the money. Easy.
Always check your tax code (usually something like 1257L) on your payslip. If it’s wrong, you might be paying too much (or too little 😬)
🧾 What If I’m Freelancing or Have a Side Hustle?
Then it’s on you to report your earnings. You’ll need to:
- Register with HMRC for Self Assessment
- File a tax return once a year
- Pay any tax owed by the deadline (usually 31 January)
Good news: You can claim expenses like laptops, subscriptions, and home office costs!
🎓 Students: Do You Still Pay Tax?
If you’re earning under £12,570 per year, you likely won’t pay income tax. But National Insurance might still apply if your monthly pay crosses the threshold.
If you accidentally paid tax but didn’t earn enough, don’t panic — you can claim it back from HMRC!
🧠 Too Lazy; Read This UK Income Tax:
- First £12,570 you earn? Tax-free
- Everything above that? Taxed in bands (usually 20%)
- If you’re employed → Tax is auto-deducted
- If you freelance → You must register and report it
- Students can often get tax refunds if overcharged
Adulting tip: Bookmark gov.uk/income-tax and check your tax code at least once a year.
Still confused? Ask your HR, a friend, or reach out to HMRC — they’re actually (surprisingly) helpful.
