If you earn £38,820 in the UK in this tax year (2006/7) you pay 0% on the first £5,035, 10% on the next £2,150 (which equals £215) and then 22% on the rest (22% * £31,635 = £6,959.70). In total this is £7,174.70 which is the result you’ll get if you use the formula above.

Note: 40% doesn’t kick in until you reach £5,035 + £33,300 = £38,335

The formula uses the logic shown in this link

http://www.mcgimpsey.com/excel/variablerate.html

An alternative formula is

=MAX(0,A1-5035)*10%+MAX(0,A1-7185)*(22%-10%)+MAX(0,A1-38335)*(40%-22%)

Of course the bands will change slightly next month for the 2007/8 tax year