How much you pay depends on your income and there are very strict and sometimes quite complex rules about it. In very simple terms, everyone can earn a certain amount of money without paying any tax. This is called your 'Personal Allowance' and is set at £6,475 for 2010/11. You will then pay 20%, 40% or 50% on the rest of your income. The rates of tax vary every year – the Chancellor of the Exchequer sets the rates at his Budget. As an example, the following rates apply to employed workers in the 2010/11 tax year.