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Don't know where to begin with tax and how it works? Martin Lewis explains key income tax concepts, including what your personal allowance is, basic and higher tax rates, and how tax bands affect what you earn. Learn why moving into a higher tax bracket DOESN'T reduce your earnings; and discover the quirky 60% effective tax rate some higher earners face due to the personal allowance reduction. Martin also explains what 'fiscal drag' is and how it affects your earnings. To read more detail about UK income tax brackets, see the full MoneySavingExpert guide: http://mse.me/60099GP 00:00 Intro 00:06 What is a personal allowance? 01:15 “Earn more: you will take home more.” 02:04 What happens when you earn between £100k and £125k 02:52 What to know about the top tax rate 03:45 How inflation impacts income tax