How much income tax should I pay?

The amount of income tax you pay depends on how much you earn and your taxable allowances.

You do not pay tax on all your income. The Inland Revenue gives us all 'allowances', which are deducted from our earnings before tax is calculated. Tax is only due on the balance.

Everybody is given a 'personal allowance'. It may change from time to time when the Treasury calculates what income from taxation the nation needs and announcements are made by the Chancellor in the Budget speech to Parliament. The personal allowance for the tax year 2008 to 2009 is £6,035.

There are other allowances, depending on your circumstances, which you can find out about on the Inland Revenue site. These additional allowances have to be claimed from the Inland Revenue.

Tax is payable only on taxable pay, i.e. the difference between earnings and allowances.

If you would like a quick indication of how much income tax and National Insurance you should be paying, you can try our online Tax Calculator.