The 40% tax bracket is an important milestone for all taxpayers in the 2024/2025 tax year because becoming a higher rate taxpayer can mean that substantially more tax will be taken from you.
Higher rate tax (40%) is applicable to both employed and self employed individuals living in England, Northern Ireland and Wales.
Knowing when the 2024/2025 40% tax rate starts for you is important so you can work out how much of your income will be taxed at the higher rate.
The rate of 40% means high income earners usually have to pay a higher percentage than the basic 20% rate on their savings and income from dividends and not just income from a job under PAYE or taxable self employed profits.
24/25 tax year 40% bracket
In the tax year 2024/2025 the higher rate 40% tax threshold begins at £50,271 and ends at £125,140.
This means that any taxable income exceeding £50,271 is subject to a 40% tax rate, up until the limit of £125,140.
The portion of income before the £50,271 threshold is liable to other rates of income tax.
After the £125,140 limit the additional rate of tax begins which is higher again sitting at 45% currently.
Other 24/25 tax year tax rates and brackets
- Tax free personal allowance: Income up to £12,570 has a 0% tax rate.
- Basic rate: Income from £12,571 to £50,270 has a 20% tax rate.
- Higher rate: Income from £50,271 to £125,140 has a 40% tax rate.
- Additional rate: Income over £125,140 has a 45% tax rate.
Scottish tax brackets for the 24/25 tax year
Scottish tax rates and bands are often different in comparison to England, Wales and NI and are set by Scottish Parliament as below:
- £12,571 – £14,876: Starter rate @ 19%.
- £14,877 – £26,561: Scottish basic rate @ 20%.
- £26,562 – £43,662: Intermediate rate @ 21%.
- £43,663 – £75,000: Higher rate @ 42%.
- £75,001 – £125,140: Advanced rate @ 45%.
- Above £125,140: Top rate @ 48%.
Check your 24/25 tax code
Whether you are a higher rate tax payer or not you should check the accuracy of your tax code for the 24/25 tax year.
A wrong tax code means you can overpay or underpay income tax from April 2024 up to April 2025 unless you get it fixed by HMRC.
The standard code based on the tax free personal allowance for the 24/25 tax year is 1257L.
If your code is different to 1257L or you think it should be different it’s best to check how your tax code has been created by HMRC so you can make the necessary steps to get it altered if it’s wrong.
When checking your code think about any company benefits you get like a company car which could lead to you having a K tax code and paying more tax or job related expenses which can reduce your income tax bill.
HMRC let you update your tax code online so you don’t pay more or less income tax than you acutally owe.
2024/2025 income tax calculator
Our income tax calculator can help you work out how much income tax might be deducted from your salary so you can calculate your all important take home pay.
The calculator provides an estimation based on the tax year and income figures selected by you.
You can use the income tax calculator to work out your take home pay from previous tax years as well.
