1. What is UK PAYE Income Tax?

PAYE (Pay As You Earn) is the system used by HM Revenue and Customs (HMRC) to collect Income Tax and National Insurance from employment. The marginal tax rates in the UK range from 20% to 45% depending on income levels and personal allowances.

2. How Does the Calculator Work?

The calculator uses the UK PAYE tax formula:

Where:

• \( Taxable Income \) — Income after personal allowance and other deductions (£)
• \( Marginal Rate \) — Applicable tax rate based on income band (20-45%)

Explanation: The calculator applies the marginal tax rate to the taxable income amount to determine the tax liability.

3. Importance of Tax Calculation

Details: Accurate tax calculation is essential for financial planning, budgeting, and ensuring compliance with UK tax laws. Understanding your tax liability helps in making informed financial decisions.

4. Using the Calculator

Tips: Enter taxable income in pounds (£) and select the appropriate marginal tax rate between 20% and 45%. Ensure all values are valid (income > 0, rate between 20-45).

5. Frequently Asked Questions (FAQ)

Q1: What are the current UK tax bands?
A: For 2024/25: Personal allowance up to £12,570 (0%), Basic rate £12,571-£50,270 (20%), Higher rate £50,271-£125,140 (40%), Additional rate over £125,140 (45%).

Q2: What is taxable income?
A: Taxable income is your total income minus your personal allowance and any other allowable deductions.

Q3: How is marginal rate determined?
A: Marginal rate is the highest tax rate you pay on your income, based on which tax band your income falls into.

Q4: Are there different rates for Scotland?
A: Yes, Scotland has different income tax rates and bands set by the Scottish Parliament.

Q5: What about National Insurance contributions?
A: This calculator only covers Income Tax. National Insurance is calculated separately based on different thresholds and rates.