Income tax allowances
Income tax allowances
The following table shows how much income you can earn that is exempt from income tax.
| Allowances | 2009/2010 (£) | 2010/2011 (£) | 2011/2012 (£) |
|---|---|---|---|
| Personal allowance | 6,475 | 6,475 | 7,475 |
| Income limit for Personal Allowance | N/A | 100,000 | 100,000 |
| Personal allowance: 65 to 74 (1) | 9,490 | 9,490 | 9,490 |
| Personal allowance: 75 and over (1) | 9,640 | 9,640 | 10,090 |
| Married couple's allowance - aged 75 and over (1)(2) | 6,965 | 6,965 | 7,295 |
| Income limit for age-related allowances | 22,900 | 22,900 | 24,000 |
| Minimum amount of married couple's allowance | 2,670 | 2,670 | 2,800 |
| Blind person's allowance | 1,890 | 1,890 | 1,980 |
Notes
(1) From the 2010-11 tax year the Personal Allowance reduces where the income is above £100, 000 - by £1 for every £2 of income above the £100,000 limit. This reduction applies irrespective of age.
(2) These allowances reduce where the income is above the income limit - by £1 for every £2 of income above the limit. For the 2009-10 tax years they will never be less than the basic Personal Allowance or minimum amount of Married Couple's Allowance. However, from the 2010-11 tax year the Personal Allowance for people aged 65 to 74 and 75 and over can be reduced below the basic Personal Allowance where the income is above £100,000.
(3) Tax relief for the Married Couple's Allowance is given at the rate of 10 per cent.
The following table shows the current income tax rates for 2009/2010, 2010/2011 and 2011/2012.
| Rate | 2009/2010 |
|---|---|
| Starting rate for savings: 10%* | £0-£2,440 |
| Basic rate: 20% | £0-£37,400 |
| Higher rate: 40% | Over £37,400 |
| Rate | 2010/2011 | 2011/2012 |
|---|---|---|
| Starting rate for savings: 10%* | £0-£2,440 | £0-£2,560 |
| Basic rate: 20% | £0-£37,400 | £0-£35,000 |
| Higher rate: 40% | £37,401-£150,000 | £35,001-£150,000 |
| Additional rate:50% | Over £150,000 | Over £150,000 |
Notes
* There is a 10 per cent starting rate for savings income only. If your taxable non-savings taxable income is above this limit then the 10 per cent starting rate for savings will not apply.
The rates available for dividends are the 10 per cent ordinary rate and the 32.5 per cent dividend upper rate. From 2010-11 onwards, as well as these rates there is a new dividend additional rate of 42.5 per cent.
This page was last reviewed on 04 July 2011. The information may not reflect changes in legislation made after this date.
This is only a guide to your tax position and should not be relied on in place of professional accounting or tax advice. Any calculated figures are illustrative and are based on the data you provided.
