April 2018

What Rate of Tax are you Paying?


At first sight Tax rates in the UK are relatively simple assuming that you pay tax, you fall into one of the 20%, 40% or 45% tax brackets. As with all of these things there’s a “but”, once you take into account National Insurance, Benefits thresholds (particularly Child Benefit) and the erosion of the Personal Allowance if earnings exceed £100,000 there are in fact a huge number of marginal taxation rates.

If we ignore Benefits the interaction of Income Tax, National Insurance and the Personal Allowance Limit can be seen in the graph below:


The graph shows the marginal tax rate applicable to a given level of income and how that has changed and will change. As can be seen the three principle marginal rates currently are 32%, 42% and 47%, however notably there also exists a marginal rate of 62% for those earning just over £100,000.

None of these thresholds are immutable however, careful arrangement of your financial affairs can mean that tax is paid at 42% rather than 62% or 32% rather than 42%. Holborn specialise in reviewing client’s current arrangements to help them manage their affairs in a more tax efficient manner.



This Briefing Note is provided for information purposes only and does not constitute any form of financial or investment advice. We believe the information to be correct at the time of going to press but we cannot accept any responsibility for any loss to any person as a result of action or refraining from action as a result of any item herein.

Printed and published by ©Holborn Financial Limited authorised & regulated by the Financial Conduct Authority. April 2018