Income Tax Rates and Allowances
Income tax is a tax on income (earning). Not all income is taxable and you’re only taxed on ‘taxable income’ above a certain levels. Even then, there are other reliefs and allowances that can reduce your income tax bill – and in some cases mean you’ve no tax to pay.
Income Tax Rates Table
|Income Tax Rates||2013/14||2014/2015|
|Starting rate of 10% on savings income up to*||£2,790||£2,880|
|Basic rate of 20% on income up to||£32,010||£31,865|
|Higher rate of 40% on income||£32,011–||£31,866–|
|Tax on first £150,000||£53,598||£53,627|
|Additional rate on income over £150,000||45%||45%|
|Basic rate taxpayers||10%||10%|
|Higher rate taxpayers||32.5%||32.5%|
|Additional rate taxpayers||37.5%||37.5%|
*Not available if taxable non-savings income exceeds the starting rate band.
Income Tax Allowances
|Main income tax allowances||2013/14||2014/2015|
|Personal allowance reduced by 50% if total income exceeds||£100,000||£100,000|
|Personal if born between 6/4/38 and 5/4/48||£10,500||£10,500|
|Personal if born before 6/4/38||£10,660||£10,660|
|Personal if born before 6/4/48 reduced by 50% if income exceeds||£26,100||£27,000|
|Married couples/civil partners (minimum) at 10%*||£3,040||£3,140|
|Married couples/civil partners (maximum) at 10%*||£7,915||£8,165|
|Blind person’s allowance||£2,160||£2,230|
*Where at least one spouse/civil partner was born before 6 April 1935.
What counts as taxable income?
Earning that count towards taxable income are:
- Earnings from employment
- Earnings from self-employment
- Pension income
- Interest on savings
- Income from shares/dividends
- rental income
What are tax free allowances?
Nearly everyone who is resident in the UK for tax purposes receives a Personal Allowance, which is an amount of taxable income you’re allowed to earn or receive each year tax-free.
This tax year (2013-14) the basic Personal Allowance – or tax-free amount – is £9,440. You may be entitled to a higher Personal Allowance if you were born before 6 April 1948.
Tax Allowances for company directors or employees?
If you’re an employee or director you might be able to get tax relief for business expenses you’ve paid for.