Tax rates:
Income tax
| Rate | % | 2010/11 | 2009/10 | 2008/09 |
| Basic* | 20% | £0 to £37,400 | £0 to £37,400 | £0-34,600 |
| Higher | 40% | £37,401 to £150,000 | 37,401 and above | 34,601 and above |
| Top | 50% | £150,001 and above | n/a | n/a |
*A 10% starting rate applies to savings income up to £2,440 (£2,320 in 2008/09), but it is not available if taxable non-savings income also exceeds this band.
Tax rate & effective tax rate on dividends
| Rate | 2010/11 | 2009/10 | 2008/09 |
| Top tax rate | 50% | 40% | 40% |
| Dividend rate | 42.5% | 32.5% | 32.5% |
| Effective rate | 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
| 2010/11 | 2009/10 | 2008/09 | 2007/08 | |
| Personal allowance | ||||
| Aged under 65 | 6,475* | 6,475 | 5,435 | 5,224 |
| Aged under 65 income over £100,000 |
restricted* | - | - | - |
| 65 to 74 | 9,490 | 9,490 | 9,030 | 7,550 |
| 75 and older | 9,640 | 9,640 | 9,180 | 7,690 |
| Blind person's allowance | 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 | 6,965 | 6,965 | 6,625 | 6,365 |
|
Age allowance limit MCA reduced by £1 for every £2 exceeding limit |
22,900 | 22,900 | 21,800 | 20,900 |
| Rent a room relief | 4,250 | 4,250 | 4,250 | 4,250 |
*Personal allowance restriction from 2010/12
The personal allowance is restricted by £1 for every £2 of income above £100,000, so that there is no personal allowance if your income is above £113,000.
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
The higher rate restrictions from 2011/12
The Government will impose a restriction of some description to reduce tax relief for higher earners, see Pensions: tax rules and planning
National Insurance rates (employers & employees) not contracted out
| Employee rate | Employer rate | Band | 2010/11 Weekly earnings |
2009/10 Weekly earnings |
2008/09 |
| - | - | LEL | Up to £97 | Up to £95 | Up to £90 |
| 0% | 0% | £97.01 to £110 | £95.01 to £110 | £90.01 to £105 | |
| 11% | 12.8% | £110.01 to £845 | £110.01 to £845 | £105.01 to £770 | |
| 1% | 12.8% | UEL | Over £845 | Over £845 | Over £770 |
LEL = Lower earnings limit
UEL = Upper earnings limit
NICs from 2011/12
The point at which employers start to pay Class 1 NICs, is to be increased by an extra £21 per week above indexation.
The NICs Upper Earnings Threshold will be aligned with the IT higher rate threshold.
| Employee rate | Employer rate | Band | 2011/12 Weekly earnings |
| - | - | LEL | TBA |
| 0% | 0% | TBA | |
| 12% | 13.8% | TBA | |
| 2% | 13.8% | UEL | TBA |
National Insurance rates: other & contracted out (expect to add 1% for 2011/12)
| Employers Class 1A on taxable benefits in kind | 12.8% |
|
Employees’ contracted-out rebate |
1.6% |
|
Married women’s reduced rate between primary threshold and upper earnings limit |
4.85% |
|
Married women’s rate above upper earnings limit |
1% |
|
Employers’ contracted-out rebate, salary-related schemes |
3.7% |
|
Employers’ contracted-out rebate, money-purchase schemes |
1.4% |
National Insurance rates (self-employed)
| 2010/11 & 2009/10 | 2010/11 & 2009/10 | 2008/09 | 2008/09 | |
| Type | Profits £ | Rate | Profits £ | Rate |
| Class 2 Flat rate | Over 5,075 | £2.40 per week | Over 4,825 | £2.30 per week |
| Class 4 | Up to 5,715 | 0% | Up to 5,435 | 0% |
| Class 4 | 5,716 (2011/12 £6,286) to 43,875 | 8% (2011/12 9%) | 5,435 to 40,040 | 8% |
| Class 4 | Over 43,875 | 1% (2011/12 2%) | Over 40,040 | 1% |
Self-employed rates will increase by 1% from 2011/12
Expect some adjustments to thresholds to mirror those for employees.
