Income Tax
| Tax rates |
Note |
2005/06 |
2004/05 |
| Starting rate band
to |
£2,090 |
£2,020 |
| Tax rate |
10% |
10% |
| Basic rate band
- next |
£30,310 |
£29,380 |
| Non-savings rate |
22% |
22% |
| Savings rate |
20% |
20% |
| UK dividend rate |
10% |
10% |
| Higher rate - taxable
income over |
£32,400 |
£31,400 |
| Higher tax rate |
40% |
40% |
| UK dividend rate |
32.5% |
32.5% |
| Trusts |
|
|
| Tax rate |
40% |
40% |
| UK dividend rate |
32.5% |
32.5% |
| Allowances that
reduce taxable income |
|
|
| Personal allowance (PA) |
under 65 |
1 |
£4,895 |
£4,745 |
| |
65 to 74 |
1,3 |
£7,090 |
£6,830 |
| |
75 and over |
1,3 |
£7,220 |
£6,950 |
| |
Blind person's allowance |
|
£1,610 |
£1,560 |
| Allowances that
reduce tax |
|
|
| Married couple's
allowance (MCA) |
|
|
|
| Tax reduction |
71 to 74 |
1,2,3 |
£590.50 |
£572.50 |
| |
75 and over |
1,2,3 |
£597.50 |
£579.50 |
| The age-related
allowances are progressively withdrawn if income exceeds |
£19,500 |
£18,900 |
| Minimum PA |
£4,895 |
£4,745 |
| Minimum MCA tax
reduction |
£228 |
£221 |
| Tax Shelters |
|
|
| Enterprise Investment
Scheme (EIS) up to |
£200,000 |
£200,000 |
| Venture Capital
Trust (VCT) up to |
£200,000 |
£200,000 |
| Golden
Handshake max. |
£30,000 |
£30,000 |
| Rent a
Room - exempt on gross annual rent up to |
£4,250 |
£4,250 |
|
Notes
- Ages are as the end of the tax year. Ages for the MCA relate
to the elder of husband or wife.
- MCA is available only to those couples where at least one spouse
was born before 6 April 1935.
- The higher rates of personal allowances are reduced by £1 for
each £2 of excess income over £19,500 (2004/05 £18,900) until
the basic allowance is reached. Similar limits apply to the married
couple's allowance: the loss of tax reduction is 10p for each
£2 of excess income (only the husband's income is taken into account)
until the minimum of £228 (2004/05 £221) is reached.
|
