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Taxes
/ Income Tax |
Income Tax
A compulsory tax on employment and investment income.
In
most countries income tax is progressive on successive slices of income,
so that the more you earn the higher the incremental rates of tax you
pay.
If
your income in a tax year is below these thresholds, you are not liable
for income tax. In some
circumstances, where tax has been deducted at source, you will be able
to reclaim tax already paid.
For
earnings above your personal allowance, your income tax liability will
go up in bands and vary according to whether the income is from
employment, share dividends or interest.
In
the UK, everyone is allowed to make a certain amount of income before
any tax is payable. Known as the 'personal allowance', the amount
increases with age, and for the year 2003-2004 the figures are:
|
Income tax allowances |
2003-04 (£) |
2004-05 (£) |
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Personal allowance |
4 615 |
4 745 |
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Personal allowance for people aged 65-74 |
6 610 |
6 830 |
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Personal allowance for people aged 75 and over |
6 720 |
6 950 |
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Income limit for age-related allowances |
18 300 |
18 900 |
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Married couple’s allowance for people born before 6 April 1935 |
5 565 |
5 725 |
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Married couple’s allowance - aged 75 or more |
5 635 |
5 795 |
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Minimum amount of married couple’s allowance |
2 150 |
2 210 |
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Blind person’s allowance |
1510 |
1 560 |
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Taxable bands 2003-04 (£)
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Taxable bands 2004-05 (£)
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Starting rate 10% |
0 - 1 960 |
Starting rate 10% |
0 - 2 020 |
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Basic rate 22% |
1 961 - 30 500 |
Basic rate 22% |
2 021 - 31 400 |
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Higher rate 40% |
Over 30 500 |
Higher rate 40% |
Over 31 400 |
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