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Income Tax
Income Tax Allowances
The single person's income tax allowance for the year 2010/2011 is £6,475 (2009/2010 - £6,475). If your total income is less than this during the tax year, you have no tax to pay.
If you are on an income of less than £6,475 (2010/2011), your bank or building society can provide you with Inland Revenue form R85 to apply for your interest to be paid gross.
For those over the age of 65, there are increased personal allowances available.
Income tax bands 2009-2011
| Rate | 2010 / 2011 Band | 2009 / 2010 Band |
|---|---|---|
| Starting rate for savings: 10% * | £0-£2,440 | £0-£2,440 |
| Basic rate: 20% | £0 - £37,400 | £0 - £37,400 |
| Higher rate: 40% | £37,401 - £150,000 | Over £37,400 |
| Additional rate: 50% | Over £150,000 | n/a |
* 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 self-employed can claim business expenses against their income. So make sure you include all possible justifiable business expenses on your self-assessment form. This also applies to capital allowances for expenditure on plant and equipment, including computers and tools, for example, used for your business.
It is worth remembering you may be able to pay further contributions to your pension, which can utilise unused tax relief.
Since its introduction in 1990, Gift Aid allows taxpayers to receive tax relief on gifts made to qualifying charities.
One other point to remember is if one spouse is a tax payer and the other is not or pays tax at a lower rate it is worth considering switching certain investments to take advantage of their unused tax allowances.
Levels and bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor.
The Financial Services Authority does not regulate taxation advice.
For further information about the 2010 Budget changes please click here.
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