Income Tax rates and allowances
Click here for National Insurance rates
All 2012/13 rates are provisional until Finance Act 2012
Income tax
| Rate | % | 2012/13 | 2011/12 | 2010/11 | 2009/10 | 2008/09 |
| Basic* | 20% | £0 to £34,370 | £0 to £35,000 | £0 to £37,400 | £0 to £37,400 | £0-34,600 |
| Higher | 40% | £34,370 to £150,000 | £35,001 to £150,000 | £37,401 to £150,000 | 37,401 and above | 34,601 and above |
| Top | 50% | £150,001 and above | £150,001 and above | £150,001 and above | n/a | n/a |
*A 10% starting rate applies to savings income up to:
- £2,710 2012/13
- £2,560 2011/12
- £2,440 2010/11
- £2,320 2008/09 to 2009/10
but it is not available if taxable non-savings income also exceeds this band.
Note restriction on personal allowances when income is in excess of £100,000 from 2010/11 onward
Tax rate & effective tax rate on dividends
| Rate | 2012/13 | 2011/12 | 2010/11 | 2009/10 | 2008/09 |
| Top tax rate | 50% | 50% | 50% | 40% | 40% |
| Dividend rate | 42.50% | 42.50% | 42.5% | 32.5% | 32.5% |
| Effective rate | 36.11% | 36.11% | 36.11% | 25% | 25% |
For example: if an individual receives a dividend of £20,000 in 2010/11 (dividends are paid net of 10% tax), and he is subject to the top rate tax, he will face a tax liability of £7,222 on the dividend.
Personal allowances and reliefs
| 2012/13 | 2011/12 | 2010/11 | 2009/10 | 2008/09 | 2007/08 | |
| Personal allowance |
£ |
£ |
£ |
£ |
£ |
£ |
| Aged under 65* | 8,105 | 7,475 | 6,475 | 6,475 | 5,435 | 5,224 |
| 65 to 74 | 10,500 | 9,940 | 9,490 | 9,490 | 9,030 | 7,550 |
| 75 and older | 10,660 | 10,090 | 9,640 | 9,640 | 9,180 | 7,690 |
| Blind person's allowance | 2,100 | 1,980 | 1,890 | 1,890 | 1,800 | 1,800 |
| Married couples allowance (MCA) | ||||||
|
Under 75, born before 6.5.35 |
- | - | - |
- |
6,535 | 6,285 |
| 75 and older | 7.705 | 7,295 | 6,965 | 6,965 | 6,625 | 6,365 |
|
Age allowance limit MCA reduced by £1 for every £2 exceeding limit |
25,400 | 24'000 | 22,900 | 22,900 | 21,800 | 20,900 |
| Rent a room relief | 4,2540 | 4,250 | 4,250 | 4,250 | 4,250 | 4,250 |
*Personal allowance restriction from 2010/12 on
The personal allowance is restricted by £1 for every £2 of income above £100,000.
Pensions
Changes affecting higher paid earners (those with relevant income of £130,000 or more). See Pensions: tax rules and planning
The Special Annual Allowance charge (anti-forestalling)
2009/10 & 2010/11
Tax relief will be restricted when irregular or one off contributions exceed £20,000 (or £30,000 in some situations) and an individual's relevant income exceeds £130,000, see Pensions: tax rules and planning
Higher rate restrictions from 2011/12
- The pensions savings annual allowance reduced to £50,000 (from £215,000)
- The lifetime allowance is reduced to £1.5 million (from £1.8 million)
see Pensions: tax rules and planning
Join us on LinkedIn 
