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Income tax and capital gains tax rates
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2009/10 |
2008/09 |
| Starting rate (savings income only)* |
£2,440 |
£2,320 |
| Basic rate on next |
£37,400 |
£34,800 |
| Higher rate on taxable income over |
£37,400 |
£34,800 |
* The starting rate does not apply to general income; it only applies to savings income if general income less allowances is less than £2,440. This starting rate band is included in the basic rate band of £37,400.
Rates differ for
|
General |
Savings |
Dividend |
| Starting |
N/A |
10% |
10% |
| Basic |
20% |
20% |
10% |
| Higher |
40% |
40% |
32.5% |
Allocation of rate bands
Taxable income uses up the rate bands in the following order:
- *'general income' (employment, business profits, rent)
- *'savings income' (mainly interest)
- *'dividends' (mainly distributions from companies)
Extension of basic rate band
A taxpayer who pays personal (including stakeholder) pension policy premiums, or gives cash to charity under the Gift Aid scheme,
increases the basic rate band by the grossed up equivalent of the payment. This means that more tax is paid
at the basic rate and less is paid at the top rate.
Filing of return and payment
2009/10 personal tax return: due to be filed by 31 January 2011 (online) or 31 October 2010 (paper)
- *penalty for late return: £100 (or the tax due, if less)
2009/10 tax payable:
- tax on employment income paid under PAYE each month
- basic rate liability on savings and dividends usually settled by receiving the income net of tax paid or credited
- balance of tax due under self assessment (SA):
- payments on account due 31 January 2010 and 31 July 2010, based on the 2008/09 SA income tax and Class 4 NIC
- balance, plus any CGT, due 31 January 2011, with the first payment on account for 2010/11
Missing any payment dates leads to interest; missing the balancing payment date by 28 days will lead
to a 5% surcharge and a further 5% surcharge if not paid by following 31 July.
Main personal allowances
| |
2009/10 |
2008/09 |
| Personal income tax allowance |
£6,475 |
£6,035 |
| CGT annual exemption |
£10,100 |
£9,600 |
| Blind person's allowance |
£1,890 |
£1,800 |
Age allowances
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2009/10 |
2008/09 |
| Personal allowance (PA) |
| • *Age 65 - 74 in the tax year |
£9,490 |
£9,030 |
| • *Age 75 and over in the tax year |
£9,640 |
£9,180 |
| • *Minimum* |
£6,475 |
£6,035 |
Married couple' allowance (MCA)**(also for civil partners) |
| • *Age up to 74 |
£N/A |
£6,535 |
| • *Age 75 and over |
£6,965 |
£6,625 |
| • *Minimum* |
£2,670 |
£2,540 |
Income Limit* |
£22,900 |
£21,800 |
* If the taxpayer's total income exceeds the income limit (extended for gift aid and pension contributions),
one-half of that excess is deducted from the allowances - first from the PA until the minimum is reached,
then from the MCA until the minimum is reached.
** Amount depends on age of older spouse; allowed at 10%; nil if born after 5 April 1935; reduced if
marriage took place during the tax year.
Main personal reliefs
Rent-a-room exemption for letting out part of the taxpayer's only or main residence:
gross income of £4,250pa
Gift aid: on a cash gift to charity, the charity can reclaim 22/78 (28.2%) of the
donation from HMR&C if the donor makes a declaration. The donor increases the basic rate band
by the gross gift (100/80). The market value of gifts of land or quoted shares can be deducted from taxable
income for full tax relief, and the charity pays no tax on the gift received. Also "Give as you earn" scheme allows charitable
gifts to be made from pre-tax pay, so PAYE is reduced.
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