Basic Rate of Tax
The tax system in the U.K. allows you to earn some money without incurring any tax liability ( this is determined by your personal allowance ), earn some money which is taxed at the lower rate , then earn some money which is taxed at the basic rate and then earn some money which is taxed at the higher rate . In other words, in economists jargon, the tax system is progressive - the more you earn, the higher your marginal rate of tax.
Approximately 16 million tax payers pay tax at the basic rate as their top rate of tax. The basic rate of income tax has been cut in stages from 33 per cent when the Conservative government took office in 1979 to 23 per cent in 1995 and, after Labour came to power in 1997 to 22 per cent in 2000.