Income Tax Rates & Allowances

Tax rates and bands

Tax rate Tax bands in 2011 - 12
Starting rate for savings: 10% £0-£2,560
Basic rate: 20% £0-£35,000
Higher rate: 40% Over £35,001-£150,000
Additional higher rate: 50% Over £150,000
A tax allowance is the amount of tax-free income an employee can earn in a year. All employees are currently entitled to a basic tax allowance. Some employees will be entitled to more than one allowance.

Income tax allowances

Type of allowance Earnings for 2011-12
Personal allowance £7,475
Income limit for personal allowance £100,000 (not applicable before 6 April 2010)
Personal allowance (aged 65-74) £9,490
Personal allowance (aged 75 and over) £10,090
Income limited for age-related allowances £24,000
Married couple's allowance for people born before 6 April 1935 Not Applicable
Married couple's allowance - aged 75 or over £7,295
Minimum amount of married couple's allowance £2,800
Blind person's allowance £1,980


NICs thresholds for employees and employers

NICs threshold Earnings per week 2011-12
Primary Class 1: ET £139
Secondary Class 1: ET £136
Primary Class 1: LEL £102
Primary Class 1: UEL £817

NICs rates for employees and employers

Type Rate for 2011-12
Primary Class 1: employees earning over the ET 12% of £139.01 to £817 per week and 2% on all earnings above £817
Secondary Class 1: Employees earning over the ET 13.8% of earnings above £136 per week
Married women paying reduced rate NICs 5.85% of £139.01 to £817 per week and 1% on all earnings above £817
Employees' contracted - out rebate 1.6%
Employers' contracted - out rebate (salary-related schemes) 3.7%
Employers' contracted - out rebate (money-purchase schemes) 1.4%

Corporation Tax rates for financial years 2008 - 2011

Rates for financial years starting on 1 April

  2008 2009 2010 2011
Small Profits Rate* 21%* 21%* 21%* 20%*
Small Profits Rate £300,000 £300,000 £300,000 -
can be claimed by qualifying companies with profits at a rate not exceeding
Marginal Relief lower limit £300,000 £300,000 £300,000 -
Marginal Relief upper limit £1.5 million £1.5 million £1.5 million -
Standard fraction 7/400 7/400 7/400 -
Main rate of Corporation Tax 28%* 28%* 28%* 27%*
Special rate for unit trusts and open-ended investment companies 20% 20% 20% -
VAT rates from 1 January 2010 are:
  • Standard - 17.5 per cent
  • Reduced - 5 per cent
  • Zero rate - 0 per cent
Note that the standard VAT rate was 15 per cent between 30 November 2008 and 31 December 2009.

VAT rates from 4 January 2011 are:

  • Standard - 20 per cent
  • Reduced - 5 per cent
  • Zero rate - 0 per cent