Income tax

Rate % 2011/12 2010/11 2009/10 2008/09
Basic* 20% £0 to £35,000 £0 to £37,400 £0 to £37,400 £0-34,600
Higher 40% £35,001 to £150,000 £37,401 to £150,000 37,401 and above 34,601 and above
Top 50% £150,001 and above £150,001 and above n/a n/a

*A 10% starting rate applies to savings income up to:

  • £2,560 2011/12
  • £2,440 2010/11
  • £2,320 2008/09 to 2009/10

but it is not available if taxable non-savings income also exceeds this band.

Note restriction on personal allowances when income is in excess of £100,000 from 2010/11 on.

Tax rate & effective tax rate on dividends

Rate 2011/12 2010/11 2009/10 2008/09
Top tax rate 50% 50% 40% 40%
Dividend rate 42.50% 42.5% 32.5% 32.5%
Effective rate 36.11% 36.11% 25% 25%

For example: if an individual receives a dividend of £20,000 in 2010/11 (dividends are paid net of 10% tax), and he is subject to the top rate tax, he will face a tax liability of £7,222 on the dividend.

 

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