| Income Tax allowances | 2009-10 | 2010-11 | 2011-12 |
|---|---|---|---|
| Personal Allowance (1) | £6,475 | £6,475 | £7,475 |
| Income limit for Personal Allowance | Not applicable | £100,000 | £100,000 |
| Personal Allowance for people aged 65-74 (1)(2) |
£9,490 | £9,490 | £9,940 |
| Personal Allowance for people aged 75 and over (1)(2) |
£9,640 | £9,640 | £10,090 |
| Married Couple’s Allowance (born before 6th April 1935 but aged under 75) (2)(3)(4) |
Not applicable | Not applicable | Not applicable |
| Married Couple’s Allowance (born before 6th April 1935 and aged 75 and over) (2) (3) |
£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 |
- 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. - These allowances reduce where the income is above the income limit for age-related allowances by £1 for every £2 of income
above the limit. For the 2009-10 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. - Tax relief for the Married Couple’s Allowance is given at the rate of 10 per cent.
- In the 2009-10 tax year all Married Couple’s Allowance claimants in this category became 75 at some point during the year and therefore
entitled to the higher amount of the allowance – for those aged 75 and over.
Income Tax rates and taxable bands
| Rate | 2009-10 | 2010-11 | 2011-12 |
|---|---|---|---|
| Starting rate for savings: 10%* | £0-£2,440 | £0-£2,440 | £0-£2,560 |
| Basic rate: 20% | £0-£37,400 | £0-£37,400 | £0-£35,000 |
| Higher rate: 40% | Over £37,400 | £37,401-£150,000 | £35,001-£150,000 |
| Additional rate: 50% | Not applicable | Over £150,000 | Over £150,000 |
* From 2008-09 there is a 10 per cent starting rate for savings income only. If your non-savings income is above this limit then the 10 per
cent starting rate for savings will not apply.
The rates available for dividends for the 2009-10 tax year are the 10 per cent ordinary rate and the 32.5 per cent dividend upper rate.
From the 2010-11 tax year, as well as these rates there is a new dividend additional rate of 42.5 per cent.
HM Revenue & Customs: Corporation Tax rates
| Rate | 2009 | 2010 | 2011 | 2012 |
|---|---|---|---|---|
| Small Profits Rate* | 21%* | 21%* | 20%* | |
| Small Profits Rate can be claimed by qualifying companies with profits at a rate not exceeding |
£300,000 | £300,000 | £300,000 | |
| Marginal Relief Lower Limit | £300,000 | £300,000 | £300,000 | |
| Marginal Relief Upper Limit | £1,500,000 | £1,500,000 | £1,500,000 | |
| Standard fraction | 7/400 | 7/400 | 3/200 | |
| Main rate of Corporation Tax* | 28%* | 28%* | 26%* | 25%* |
| Special rate for unit trusts and open-ended investment companies |
20% | 20% | 20% |
Marginal Relief changes from 1 April 2010
From 1 April 2010 onwards, the terminology used to describe some Corporation
Tax rates and reliefs changed. This table reflects the new terminology
but for ease the changes are shown below:
- Small Profits Rate – previously Small Companies’ Rate
- Marginal Relief – previously Marginal Small Companies’ Relief
- Standard fraction – previously Marginal Small Companies’ Relief
fraction - Ring fence fraction – previously Marginal Small Companies’
Relief fraction (ring fence profits)
The main rate of Corporation Tax applies when profits (including ring
fence profits) are at a rate exceeding £1,500,000, or where there
is no claim to another rate, or where another rate does not apply.
Ring fence companies
*For companies with ring fence profits (income and gains from oil
extraction activities or oil rights in the UK and UK Continental Shelf)
these rates differ. The Small Profits Rate of tax on those profits is
19 per cent and the ring fence fraction is 11/400 for financial years
starting 1 April 2009, 2010 and 2011. The main rate is 30 per cent for
financial years starting on 1 April 2009, 2010 and 2011.
Corporation Tax on chargeable gains
Indexation Allowance allows for the effects of inflation when calculating
the chargeable gains of companies or organisations.
VAT rates
There are different rates of VAT that apply to different types of goods and services. And there are some goods and services that are exempt from VAT.
There are three VAT rates:
- standard rate – 20 per cent
- reduced rate – 5 per cent
- zero rate – 0 per cent
The rates of VAT may change from time to time – the changes are usually announced in the Budget. So you’ll need to check regularly to make sure you’re using the correct VAT rates.
VAT registration threshold
If you’re in business, you must register for VAT if your VAT taxable turnover for the previous 12 months is more than £73,000. This figure is known as the VAT registration threshold. The threshold changes – usually once a year announced in the Budget – so you should regularly check your turnover against the current threshold.
You must also register for VAT if either of the following applies:
- you think your VAT taxable turnover may go over the threshold in the next 30 days alone
- you take over a VAT-registered business as a going concern
Deregistration threshold
The deregistration threshold is £71,000. If your VAT taxable turnover for the year is less than or equal to £71,000, or if you expect it to fall to £71,000 or less in the next 12 months, you can either:
- stay registered for VAT
- ask for your VAT registration to be cancelled