2010-11 Tax Rates
2010-11 Tax Rates
2010 Budget - 22nd June 2010
The 1st coalition government's budget proposed various changes to future tax rates and allowances. For full details see HMRC's website.
Readers may know that the red wooden box that has carried many a government's budget to the House of Commons since Gladstone's budget in 1860, made its last official appearance in June and is being given a well-earned rest in the Cabinet War Rooms . Word is that a replacement box, using traditional materials and techniques, has been commissioned - should be ready in time for the next budget!
Year ended 5 April 2011
Income Tax
Personal allowances will remain at the same level as 2009-10. Similarly, the tax threshholds will not rise but a new 50% rate has been added where taxable income is in excess of £150,000.
Personal allowances are withdrawn by £1 for each £2 for individuals where income exceeds £100,000 thus introducing an effective tax rate of 60% for taxable income between £100,000 and £112,950.
The basic rate of income tax remains at 20% up to £37,400.
The new dividend rate for higher rate taxpayers with income in excess of £150,000 is 42.5% with an effective rate of 36.11% times the net dividend.
National Insurance
The standard rate of Employees national insurance contributions has stayed the same at 11%, with an expected increase to 12% next year.
The upper limit will remain at £43,875, thereafter contributions will be charged at 1%. This additional rate is set to increase to 2% in 2011-12.
Employers NIC Will rise from 12.8% to 13.8% with no upper limit.
Capital Gains
The previous rate of capital gains tax is 18%. Entrepreneurs relief is available to offset against capital gains where there is a 'qualifying disposal' reducing the effective rate of tax to 10%
An additional rate of capital gains tax is effective from 23 June 2010. The new 28% rate will be applied to gains where taxable income and gains exceed the basic rate band.
Entrepreneur's Relief will remain, with the Lifetime Allowance being raised to £5m!