Income Tax rates and bands - Cutter & Co Chartered Accountants

Personal Taxation

Allowed at top rate of tax

2010/11

2009/10

Personal Allowance

£6.475

£6,475

Personal Allowance (65-74)*

9,490

Personal Allowance (75 and over)*

9,640

1,890

Personal allowances in 2010/11 are withdrawn at £1 for every £2 by which total income exceeds £100,000.

Allowed only at 10%

Married Couple’s Allowance*

6,965

Income Limit for age-related allowances

22,900

* Age allowances are reduced £1 for every £2 by which income exceeds the income limit, until the age allowance is reduced to the normal allowance. Personal allowance is reduced before married couple’s allowance. MCA is reduced to a minimum of £2,670 (2009/10: £2,670).

Starting rate on band **

2,440

Basic rate band

37,400

Higher rate band

37,401-150,000

over 37,400

Additional rate

over 150,000

–

** Starting rate band is within basic rate band and applies to savings income only; if taxable general income exceeds the band, the 10% rate is not available.

Tax rates

Rates differ for General/Savings/Dividends
	2010/11			2009/10
	G	S	D	G	S	D
Starting rate	N/A	10%	10%	N/A	10%	10%
Basic rate	20%	20%	10%	20%	20%	10%
Higher rate	40%	40%	32.5%	40%	40%	32.5%
Additional rate	50%	50%	42.5%	–	–	–

General income (salary, pension, profit, rent) uses lower rate bands first, then savings (interest), then dividends. Discretionary trusts: basic rate as above applies to the first £1,000 of income, then highest rate.