How can I work out my tax?

You can work out your tax by following these four stages:

1. Work out if your income is taxable
2. Work out the allowances you can deduct from your taxable income or final bill
3. Work out at what rate your income is taxed
4. Can you deduct anything from your final tax bill?

Work out whether your income is taxable

Some income is taxable and some is tax-free. Common sources of taxable income are:

• Earned income from employment or self employment
• Pensions, including state pension and annuities (but not war pensions)
• Foreign income
• Interest from savings accounts
• Dividends from investments
• Income from rental property
• Some benefits

Work out the allowances you can deduct from your taxable income or your final tax bill

There are several different tax allowances to which you might be entitled.

Every man, woman and child in the UK has a ‘Personal Allowance’. For 2025/26 the Personal Allowance for everyone (on incomes below £100,000) is £12,570.

There is also a Blind Person’s Allowance for those who qualify. Despite its name, you do not have to be completely without sight to claim it, so if you have very poor eyesight, check if you could be entitled.

If you are part of a married couple or a civil partnership and either you or your spouse or partner was born before 6 April 1935, a married couple’s allowance might be available. Finally the marriage allowance, available to married couples and civil partners who are basic rate taxpayers where one of them has unused allowances.

You can find out more information on these allowances on our page ‘what tax allowances am I entitled to?’

Work out at what rate your income is taxed

If you qualify,  some  savings income might be taxed at 0%.

A £500 Dividend Allowance is available in 2025/26 and only amounts above this allowance will be taxable at your marginal rate. If you are a basic rate taxpayer 8.75%, higher rate 33.75% and additional rate at 39.35%.

Next, there is the basic rate band, where most types of income are taxed at 20%. Most people are within the basic rate band.

But for people with higher levels of income, 40% and 45% tax rates can also apply.

In Scotland there are 7 tax bands. The bands for Wales are the same as those for England.

See our section ‘what tax rates apply to me?’ for more detail.

Finally, consider whether you can deduct anything from your final tax bill

The most common deduction is tax you have already paid, either in the UK or overseas.
But take care: some deductions might not be allowed and some tax is not refundable, for example, the tax credit on UK dividends.

Example calculation
To work out your tax, you have to do the following calculation:

• First, take your allowances from your income to work out your taxable income.
• Second, HM Revenue & Customs charge tax on your taxable income using the rates of tax that apply to you. The tax rates are set each year.

For most individuals with simple tax affairs the way the tax calculation works is as set out below. The tax year runs from 6 April one year to 5 April the next. Negative or minus numbers are shown in brackets.

So if you have a job earning £300 a week, you are single, your 2021/22 tax calculation would probably work out like this, using the table above: