Business News

Income Tax Diary

Changes from April 2010

  • The amount of basic personal allowance has not been set, but from 6 April 2010 the allowance will be subject to income limits of £100,000 and £140,000.
  • This will mean that where an individual’s income is below the £100,000 income limit, they will continue to be entitled to the full allowance.
  • For those who will be affected, their personal allowance will be reduced by £1 for every £2 that their income exceeds £100,000 until the personal allowance is reduced to Nil.  (This is instead of the two-stage reduction announced at the Pre-Budget Report)

Changes from April 2011

  • From 6 April 2011 taxable non-savings and savings income above £150,000 will be liable to income tax at a new rate 45 per cent.
  • The new rate of tax of 37.5% will apply to dividends which would otherwise be taxable at the new rate of 45%. There will therefore be three rates of tax for dividends, the 10% basic rate, the 32.5% upper rate and the 37.5% higher rate and the trust rate will also increase to 45 per cent.
  • The main rate of Class 1 and Class 4 National Insurance Contributions will be increased by 0.5 per cent to 11.5 per cent and 8.5 per cent respectively.
  • The Class 1 employer rate of National Insurance contributions will be increased by 0.5 per cent to 13.3 per cent. The increased rate will also apply to Class 1A and Class 1B contributions.
  • The additional rate of Class 1 and 4 National Insurance Contributions will be increased by 0.5 per cent to 1.5 per cent.