Budgeting and tax
Lesson 5 of 9
Income tax bands
Objective. Calculate tax where a personal allowance and bands apply.
The key idea
The allowance is tax-free. Only income above it is taxed, and each band's rate applies only to the slice of income inside that band.
Worked example
Income £30,000, allowance £12,570, basic rate 20%.
- 1Taxable: 30,000 − 12,570 = 17,430.
- 217,430 × 0.20 = 3,486.
Answer: £3,486 tax
Practice
Each question comes with a picture and a listen button. Try it first, then reveal the answer.
Common mistake. Applying the higher rate to the entire income once the threshold is crossed.
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