How to calculate UK Income tax and National Insurance - Do the numbers make sense?
The United Kingdom is globally renowned for its hard-hitting taxes, and its residents do not spare a moan about it each day. Surprisingly, the UK is not among the top ten most taxed countries in the world. According to World Population Review 2025, while the UK tax is around 45%, a good number of countries have theirs within 57% to 47% such as Finland, Japan, Austria, Denmark, Sweden, Belgium, and the Netherlands. China and Germany pay higher taxes than the UK.
According to O'Brien in the Economic History Review, Income tax has been a major financial source for the UK and was introduced in 1799 by William Pitt, initially to fund foreign wars. It gradually advanced into funding the government’s budget for healthcare, education, infrastructure, welfare, etc. Likewise, National Insurance began in 1911 when workers decided to organise a fund that would be a safety net during unemployment and sickness.
How do you calculate your income tax and NI?
Income tax and national insurance rates have changed several times in UK history. In 2025, Income tax is currently pegged at 20% while NI is 8% after the first £12,570. The income tax was previously 22% but changed to 20% in 2008; on the other hand, NI was previously at 10% but reduced to 8% in 2024.
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