Income tax rates and allowances

Income Tax Rates
Note
2012/13
2011/12
Basic rate band – income up to
£34,370
£35,000
Basic tax rate
20%
20%
Dividend ordinary tax rate
10%
10%
Savings rate band
£2,710
£2,560
Savings rate
*10%
*10%
Higher rate band – income between
£34,371 – £150,000
£35,000 – £150,000
Higher tax rate
40%
40%
Dividend higher tax rate
32.5%
32.5%
Additional rate – income over
over £150,000
over £150,000
Additional rate
50%
50%
Dividend additional rate
42.5%
42.5%
* Starting rate is for savings income up to the starting rate limit within the basic rate band. The rate applies to any balance of the limit remaining after allocating taxable non-savings income.
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
5
10%
10%
savings income
5
20%
20%
other income
5
20%
20%
Income of other trusts above £1,000 is taxed at the special trust rates:
rate applicable to trusts
50%
50%
dividend trust rate
42.5%
42.5%
Personal allowance (PA)
under 65
1,4
£8,105
£7,475
65 to 74
1,2,4
£10,500
£9,940
75 and over
1,2,4
£10,660
£10,090
Blind person’s allowance
£2,100
£1,980
Married couple’s allowance (MCA)
Either partner born before 6 April 1935 (relief restricted to 10%)
1,3,4
£7,705
£7,295
Tax Shelters
Enterprise Investment Scheme (EIS) up to
£1,000,000
£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%

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. The Age related allowances are reduced by £1 for each £2 of income above £25,400 (2011/12 £24,000), until the minimum of £8,105 (2011/12 £7,475) is reached.
  3. Similar limits apply to the married couple’s allowance. The loss of tax reduction is 10p for each £2 of income above £25,400 (2011/12 £24,000) until the minimum of £296 (2011/12 £280) 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.)
  4. For 2012/13 the minimum personal allowance is reduced, by £1 for each £2 of income from £100,000 (2011/12 – £100,000) to £116,210 (2011/12 – £114,950).
  5. 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.