INCOME TAX ALLOWANCES

2010/2011

2011/2012

£

£

Personal allowance (1)

6,475

7,475

Income limit for Personal Allowance

100,000

100,000

Personal Allowance for people aged 65–74 (1)(2)

9,490

9,940

Personal Allowance for people aged 75 and over (1)(2)

9,640

10,090

Married Couple's Allowance – aged 75 and over (2)(3)

6,965

7,295

Income limit for age-related allowances

22,900

24,000

Minimum amount of Married Couple's Allowance

2,670

2,800

Blind Person's Allowance

1,890

1,980

INCOME TAX RATES AND TAXABLE BANDS

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

* From 2008/09 there is a 10 per cent starting rate for savings income only. If non-savings income is above this limit then the 10 per cent starting rate for savings will not apply.

The dividend rate for the 2009/10 tax year is the 10 per cent ordinary rate and the 32.5 per cent dividend upper rate. From the 2010/11 tax year, in addition to these rates, there is a new dividend additional rate of 42.5 per cent.

INHERITANCE TAX THRESHOLDS

2010/2011

2011/2012

Nil rate band

£325,000

£325,000

(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 year 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.