Tax Rates and Taxable Bands

Income Tax

Income Tax rates and Taxable Bands:

* 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 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.

Income Tax allowances:

(1) These allowances reduce where the income is above the income limit - by £1 for every £2 of income above the limit. However they will never be less than the basic Personal Allowance or minimum amount of Married Couple's Allowance.
(2) Tax relief for the Married Couple's allowance is given at the rate of 10 per cent.
(3) In the 2009-10 tax year all Married Couple's Allowance claimants in this category will become 75 at some point during the year and will therefore be entitled to the higher amount of the allowance - for those aged 75 and over.

Capital Gains Tax

Each tax year nearly everyone who is liable to Capital Gains Tax gets an annual tax-free allowance - known as the 'Annual Exempt Amount'. You only pay Capital Gains Tax if your overall gains for the tax year ( after deducting any losses and applying any reliefs) are above this amount.

Rates for Capital Gains Tax:

Tax-free allowances for Capital Gains Tax

The annual tax-free allowance (known as the Annual Exempt Amount) allows you to make a certain amount of gains each year before you have to pay tax.

Nearly everyone who is liable to Capital Gains Tax gets this tax-free allowance.

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.

Annual Exempt Amounts:

Executors and personal representatives

If you're acting as an executor or personal representative for a deceased person's estate, you may get the full Annual Exempt Amount during the 'administration period'. The administration period is usually the time it takes to settle the deceased person’s affairs and get a grant of probate (or confirmation in Scotland).

You're entitled to the Annual Exempt Amount for the tax year in which the death occurred and the following two tax years. After that there's no tax-free allowance against gains made during the administration period.

Trustees for disabled people

If you're acting as a trustee for a disabled person you use the higher Annual Exempt Amount above - and not the rate for 'other trustees'.

A disabled person in this context is a person who has mental health problems or receives the middle or higher rate of Attendance Allowance or Disability Living Allowance.

Inheritance Tax

When a person dies IHT becomes due on their estate. Some lifetime gifts are treated as chargeable transfers but most are ignored providing the donor survives for seven years after the gift.

The rate of tax on death is 40% and 20% on lifetime chargeable transfers. Lifetime chargeable transfers are a transfer to a company or a trust and are immediately chargeable.

Inheritance Tax thresholds

The Inheritance Tax threshold (or 'nil rate band') is the amount up to which an estate will have no Inheritance Tax to pay.

If the estate – including any assets held in trust and gifts made within seven years of death – is more than the threshold, Inheritance Tax will be due at 40 per cent on the amount over the nil rate band.

Inheritance Tax thresholds:

Reduced Charge on gifts within 7 years of death:

Reliefs:

• Annual Exemption £3,000
• Small Gifts £250

Stamp Duty on Property

First time buyers threshold £250,000. If never owned a house or flat anywhere in the world. Applies to purchases made on or after 25 March 2010 and before 25 March 2012.

Otherwise:

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 £180,000 is charged at 1 per cent, so £1,800 must be paid in SDLT. A house bought for £350,000 is charged at 3 per cent, so SDLT of £10,500 is payable.

* Percentage of the total purchase price

Stamp Duty on Shares

Stamp Duty Reserve Tax

If existing shares are bought through a stockbroker, and the transaction is completed electronically Stamp Duty Reserve Tax applies at a flat rate of 0.5 per cent of share price.

Stamp Duty

If a stock transfer form is used Stamp Duty applies. Same 0.5 per cent rate as Stamp Duty Reserve Tax, but rounded up to the nearest £5 above.

Shares up to £1,000 no stamp duty is payable. Over this rate applies to whole amount. If given the shares no duty applies.