Income Tax
|
Tax rates
|
Note
|
2009/10
|
2008/09
|
|
Starting rate limit*
|
£2,440
|
£2,320
|
|
Tax rate*
|
10%
|
10%
|
|
Basic rate band
|
£37,400
|
£34,800**
|
|
Basic rate
|
20%
|
20%
|
|
Savings rate
|
20%
|
20%
|
|
Dividend ordinary rate
|
10%
|
10%
|
|
Higher rate - taxable income over
|
£37,400
|
£34,800**
|
|
Higher tax rate
|
40%
|
40%
|
|
Dividend upper rate
|
32.5%
|
32.5%
|
|
*Where taxable non-savings income does not fully occupy the starting rate limit, the remainder of the limit is available for savings income at the 10% starting rate.
|
|
Trusts
|
|
For interest in possession trusts on all income, and other trusts on the first £1,000 of income (”standard rate band”):
|
|
|
|
dividend ordinary rate
|
4
|
10%
|
10%
|
|
savings income
|
4
|
20%
|
20%
|
|
other income
|
4
|
20%
|
20%
|
|
Income of other trusts above £1,000 is taxed at the special trust rates:
|
|
|
|
rate applicable to trusts
|
|
40%
|
40%
|
|
dividend trust rate
|
|
32.5%
|
32.5%
|
|
Allowances that reduce taxable income
|
|
Personal allowance (PA)
|
under 65
|
1
|
£6,475
|
£6,035**
|
|
|
65 to 74*
|
1,3
|
£9,490
|
£9,030
|
|
|
75 and over*
|
1,3
|
£9,640
|
£9,180
|
|
|
Minimum
|
|
£6,475
|
£6,035
|
|
|
Blind person’s allowance
|
|
£1,890
|
£1,800
|
|
Allowances that reduce tax
|
|
Married couple’s allowance (MCA)
|
|
|
|
|
Tax reduction
|
74*
|
1,2,3
|
n/a
|
£653.50
|
|
|
75 and over*
|
1,2,3
|
£696.50
|
£662.50
|
|
*The age-related allowances are progressively withdrawn if income exceeds
|
£22,900
|
£21,800
|
|
Minimum PA
|
£6,475
|
£6,035**
|
|
Minimum MCA tax reduction
|
£267
|
£254
|
|
Tax Shelters
|
|
Enterprise Investment Scheme (EIS) up to
|
|
£500,000
|
£500,000
|
|
Venture Capital Trust (VCT) up to
|
£200,000
|
£200,000
|
|
Golden Handshake max.
|
£30,000
|
£30,000
|
|
Rent a Room - exempt on gross annual rent up to
|
£4,250
|
£4,250
|
|
Construction Industry Scheme deduction rate:
|
|
|
|
Standard (registered)
|
20%
|
20%
|
|
Higher (not registered)
|
30%
|
30%
|
|
** Figures are based on the 13 May revisions to the original announcements made in the 2008 Budget.
Notes
- Ages are as at the end of the tax year. Ages for the MCA relate to the elder of spouse or civil partner.
- MCA is available only to those couples where at least one spouse or civil partner was born before 6 April 1935.
- The higher rates of personal allowances are reduced by £1 for each £2 of excess income over £22,900 (2008/09 £21,800) until the basic allowance is reached. Similar limits apply to the married couple’s allowance: the loss of tax reduction is 10p for each £2 of excess income until the minimum of £267 (2008/09 £254) is reached. (For couples married before 5 December 2005, only the husband’s income is taken into account. For those married on or after 5 December 2005 or in a civil partnership, only the higher earner’s income is taken into account).
- Where there are several trusts created by the same settlor, the “standard rate band” is divided equally between them, subject to a minimum band of £200 for each trust.
