Income Tax

Income Tax Rates		Note	2012/13	2011/12
Basic rate band – income up to			£34,370	£35,000
Starting rate for savings			*10%	*10%
Basic rate			20%	20%
Dividend ordinary rate			10%	10%
Higher rate – income over			£34,370	£35,000
Higher rate			40%	40%
Dividend upper rate			32.5%	32.5%
Additional rate – income over			£150,000	£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 of £2,710 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

Ages are as the end of the tax year. Ages for the MCA relate to the elder spouse or civil partner.
The higher rates of personal allowances are reduced by £1 for each £2 of excess income over £25,400 until the basic allowance is reached.
Similar limits apply to the married couple’s allowance. The reduction in allowance is subject to a minimum level of £2,960. (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.)
The personal allowance, including the minimum age-related allowance, is reduced by £1 for every £2 that net adjusted income exceeds £100,000.
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.