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Overview. Income tax forms the single largest source of revenues collected by the government. The second largest source of government revenue is National Insurance Contributions. The third largest source of government revenues is value added tax (VAT), and the fourth-largest is corporation tax.
UK income tax rates depend on your income. Currently, the UK basic income tax rate is 20%. This increases to 40% for your earnings above 50,270 and to 45% for earnings over 125,140. Your earnings below 12,570 are tax-free.
progressive taxA tax that takes a larger percentage of income from high-income groups than from low-income groups. proportional taxA tax that takes the same percentage of income from all income groups. regressive taxA tax that takes a larger percentage of income from low-income groups than from high-income groups.
In absolute terms, you pay less income tax in the US. The highest rate of income tax in the US is 37% if you earn over $523k. In the UK, its 45% if you earn over 150k. In many US states, you also have to pay state taxes - some states pay nothing, but New York, for example, the state taxes can be an additional 8.8%.
While there are many different forms of tax in the UK, the 3 main taxes in the UK that bring in the most funds are income tax, National Insurance Contributions, and value-added tax.
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Basic Rate 20% on income over 12,571 (standard Personal Allowance) up to 50,270. Higher Rate tax band 40% on income between 50,271 and 125,140. Additional Rate tax band 45% on any income over 125,140.
UK residents have to pay tax on their UK and foreign gains. Non-residents have to pay tax on income, but usually only pay Capital Gains Tax either: on UK property or land. if they return to the UK.
Most receipts come from three main sources: income tax, National Insurance contributions (NICs) and value added tax (VAT). Together they raised around 586 billion in 2022/23.

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