Income Tax
Main reliefs
| Allowed at top rate of tax | 2014/15 | 2013/14 |
|---|---|---|
| Personal Allowance (PA) | £10,000 | £9,440 |
| Personal Allowance (born 6.4.38-5.4.48)* | 10,500 | 10,500 |
| Personal Allowance (born before 6.4.38)* | 10,660 | 10,660 |
| Blind Person's Allowance | 2,230 | 2,160 |
| Allowed only at 10% | ||
|---|---|---|
| Married Couple's Allowance (MCA)* (only available if born before 6.4.35) |
8,165 | 7,915 |
| Age-related allowances (AA)* income limit | 27,000 | 26,100 |
*AA reduced by £1 for every £2 by which income exceeds limit.
Personal AA reduced before MCA until equal to normal PA (£10,000).
MCA reduced to minimum £3,140 (2013/14: £3,040).
PA is withdrawn at £1 for every £2 by which total income exceeds £100,000
(PA is nil at income of £120,000 or more).
Rate bands
| 2014/15 | 2013/14 | |
|---|---|---|
| Basic rate band (BRB) | 31,865 | 32,010 |
| Higher rate band (HRB) | 31,866-150,000 | 32,011-150,000 |
| Additional rate | over 150,000 | over 150,000 |
BRB and HRB are extended by Gift Aid donations and personal pension contributions up to permitted limit.
Tax rates
Rates differ for General/Savings/Dividend income
| 2014/15 unchanged from 2013/14 | |||
|---|---|---|---|
| G | S | D | |
| Basic rate | 20% | 20% | 10% |
| Higher rate | 40% | 40% | 32.5% |
| Additional rate | 45% | 45% | 37.5% |
General income (salary, pension, profit, rent) uses lower rate bands first, then savings (interest), then dividends. UK dividends received are 90% of taxable amount with 10% tax credit.
If taxable general income is less than £2,880 (2013/14: £2,790), savings income is taxed at a ‘starting rate’ of 10% until total taxable income exceeds that limit. This ‘starting rate band’ is part of the BRB.