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• From the 2010-11 tax year the Personal Allowance reduces where the income is above £100, 000 - by £1 for every £2 of income above the £100,000 limit. This reduction applies irrespective of age.

• These allowances reduce where the income is above the income limit for age-related allowances by £1 for every £2 of income above the limit. For the 2009-10 they will never be less than the basic Personal Allowance or minimum amount of Married Couple's Allowance. However, from the 2010-11 tax year the Personal Allowance for people aged 65 to 74 and 75 and over can be reduced below the basic Personal Allowance where the income is above £100,000.

• Tax relief for the Married Couple's Allowance is given at the rate of 10 per cent.

• In the 2009-10 tax year all Married Couple's Allowance claimants in this category became 75 at some point during the year and therefore entitled to the higher amount of the allowance - for those aged 75 and over.

• 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 rates available for dividends for the 2009-10 tax year are the 10 per cent ordinary rate and the 32.5 per cent dividend upper rate. From the 2010-11 tax year, as well as these rates there is a new dividend additional rate of 42.5 per cent.

Class 1A NICs are payable in July and are calculated on the value of taxable benefits provided in the previous tax year, using the secondary Class 1 percentage rate appropriate to that tax year.

Marginal Relief changes from 1 April 2010

From 1 April 2010 onwards, the terminology used to describe some Corporation Tax rates and reliefs changed. This table reflects the new terminology but for ease the changes are shown below:

• Small Profits Rate - previously Small Companies’ Rate

• Marginal Relief - previously Marginal Small Companies’ Relief

• Standard fraction - previously Marginal Small Companies’ Relief fraction

• Ring fence fraction - previously Marginal Small Companies’ Relief fraction (ring fence profits

The main rate of Corporation Tax applies when profits (including ring fence profits) are at a rate exceeding £1,500,000, or where there is no claim to another rate, or where another rate does not apply.

Ring fence companies

For companies with ring fence profits (income and gains from oil extraction activities or oil rights in the UK and UK Continental Shelf) these rates differ. The Small Profits Rate of tax on those profits is 19 per cent and the ring fence fraction is 11/400 for financial years starting 1 April 2009, 2010 and 2011. The main rate is 30 per cent for financial years starting on 1 April 2009, 2010 and 2011. 

 

Capital Gains Tax

The annual tax-free allowance (known as the Annual Exempt Amount) allows relief on gains each year;

There's one Annual Exempt Amount for:

• most individuals who live in the UK

• executors or personal representatives of a deceased person's estate

• trustees for disabled people

Most other trustees get a lower Annual Exempt Amount.

• Gains arising after 22 June 2010 may be charged at different rates.  

SDLT rates for residential property

The table below applies for all freehold residential purchases and transfers and the premium paid for a new lease or the assignment of an existing lease.

New leases

If the transaction involves the purchase of a new lease with a substantial rent there may be an additional SDLT charge to that shown below, based on the rent.

Residential land or property SDLT rates and thresholds

If the value is above the payment threshold, SDLT is charged at the appropriate rate on the whole of the amount paid. For example, a house bought for £130,000 (by someone who is not a first-time buyer) is charged at 1 per cent, so £1,300 must be paid in SDLT. A house bought for £350,000 is charged at 3 per cent, so SDLT of £10,500 is payable.

First time buyers

The first time buyer's £250,000 threshold applies from 25 March 2010 up to 24 March 2012 inclusive.

£1 million threshold for wholly residential property

From 6 April 2011 SDLT on residential properties over £1 million is charged at 5%. It does not apply to non-residential or mixed-use properties. 

 

VAT rates

There are currently three VAT rates:

• standard rate – 20%

• reduced rate – 5%

• zero rate – 0%

The rates of VAT may change from time to time - the changes are usually announced in the Budget. 

 

VAT registration threshold

 

If you're in business, you must register for VAT if your VAT taxable turnover for the previous 12 months is more than £73,000 for 2011/12. This figure is known as the VAT registration threshold. The threshold changes - usually once a year announced in the Budget.

 

You must also register for VAT if either of the following applies:

• you think your VAT taxable turnover may go over the threshold in the next 30 days alone

• you take over a VAT-registered business as a going concern

Deregistration threshold

 

The deregistration threshold is £71,000 for 2011/12.

 

If your VAT taxable turnover for the year is less than or equal to £71,000, or if you expect it to fall to £71,000 or less in the next 12 months, you can either:

• stay registered for VAT

• ask for your VAT registration to be cancelled

Pension Schemes: Standard Lifetime Allowance
Tax Year	Amount (£)
2006-07	£1,500,000
2007-08	£1,600,000
2008-09	£1,650,000
2009-10	£1,750,000
2010-11	£1,800,000

Member contributions

There is no limit on the amount that an individual can contribute to a registered pension scheme. If you are a UK resident aged under 75 you may receive tax relief on your contributions to a registered pension scheme. Tax relief is limited to relief on contributions up to the higher of

• 100 per cent of your UK taxable earnings

• £3,600

Any amount of contributions paid over the annual allowance will be liable to the annual allowance charge.

 

Annual Allowance
Tax Year	Amount (£)
2006-07	£215,000
2007-08	£225,000
2008-09	£235,000
2009-10	£245,000
2010-11 2011-12	£255,000 £50,000

Notional Earnings Cap

Before 6 April 2006 the rules of many pension schemes limited the amount of benefits that could be provided or contribution paid by reference to the permitted maximum under s590C ICTA 1988. Although section 590C ICTA 1988 was repealed on 6 April 2006 the permitted maximum can continue to apply to registered pension schemes for a period up to 5 April 2011 because of regulation 4 of The Registered Pension Schemes (Modification of the Rules of Existing Schemes) Regulations 2006 – SI 2006/364.

If section 590C had not been repealed on 6 April 2006, a Treasury order would have stated the permitted maximum figure for the tax years as follows;

 

Tax Year	Amount (£)
2006-07	£108,600
2007-08	£112,800
2008-09	£117,600
2009-10	£123,600
2010-11	£123,600

Tax charges on payments from registered pension schemes

There are a number of special tax charges that apply to special payments made from registered pension schemes. These are listed below. The normal Income Tax rates apply to ordinary pensions payments made from pension schemes.

 

Charges	Rates
Lifetime allowance charge	55% - if the amount over the lifetime allowance is paid as a lump sum 25% - if the amount over the lifetime allowance is not taken as a lump sum
Annual allowance charge	40%
Unauthorised payments charge	40%
Unauthorised payments surcharge	15%
Short service refund lump sum charge	Years to 2009-10 20% on first £10,800, 40% on amounts over £10,800
Short service refund lump sum charge	From 2010-11 20% on first £20,000, 50% on amount over £20,000
Special lump sum death benefits charge	35%
Authorised surplus payments charge	35%
Scheme sanction charge	15% - 40%

 

Savings

 

The 10% starting rate of Income Tax includes savings income. Where an individual has savings income in excess of the starting rate limit they will be taxed at the lower rate of 20% up to the basic rate limit and at the higher rate of 40% for income above the basic rate limit.

 

The rates of tax for dividends are 10% for income up to the basic rate limit and 32.5% for income above the basic rate limit.