information

income tax

Income Tax Rates
Rates for 2009/10 are as follows:
Note
 2009/10
2008/09

Starting rate limit*
 Tax rate*
£2,440
10%
£2,230
10%
Basic rate band
 Basic rate
 Savings rate
 Dividend ordinary rate
£37,400
20%
20%
10%
£34,800
20%
20%
10%
Higher rate - taxable income over
 Higher tax rate
 Dividend upper rate

* 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.

£37,400
40%
32.5%

£34,800
40%
32.5%
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
   savings income
   other income
 Income of other trusts above £1,000 is taxed at the special trust rates:
  rate applicable to trusts
  dividend trust rate






4
4
4






10%
20%
20%



40%
32.5%






10%
20%
20%



40%
32.5%
Allowances that reduce taxable income
Personal allowance (PA)
 under 65
 65 to 74*
 75 and over*
 minimum
 Blind person's allowance



1
1,3
1,3



£6,475
£9,490
£9,640
£6,475
£1,890



£6,035
£9,030
£9,180
£6,035
£1,800

Allowances that Reduce Tax
Married couples allowance (MCA)
Tax reduction         74*
                           75 and                            over*
                           minimum
*The age-related allowances are progressively withdrawn if income exceeds.



1,2,3

1,2,3



n/a

£662.50
£21,800


£267



£653.50

£636.50
£20,900


£254

Tax Shelters
Enterprise Investment Scheme (EIS) up to 
Venture Capital Trust (VCT) up to
Golden Handshake max
Rent a room - exempt on gross annual rent up to
Construction Industry Scheme deduction rate:
Standard (registered)
Higher (not registered)








£500,000
£200,000
£30,000

£4,250


20%
30%



£500,000
£200,000
£30,000

£4,250


20%
30%

Notes
  1. Ages are as the end of the tax year. Ages for the MCA relate to the elder of spouse or civil partner.
  2. MCA is available only to those couples where at least one spouse or civil partner was born before 6 April 1935.
  3. 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 couple's 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).
  4. 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.