Personal tax – tax bands and rates for 2013/14 and 2014/15

Posted on: March 21st, 2013

Tax bands and rates 2013/14

The basic rate of tax is currently 20%. The band of income taxable at this rate is being reduced from £34,370 to £32,010 so that the threshold at which the 40% band applies will fall from £42,475 to £41,450 for those who are entitled to the full basic personal allowance.

The 50% band applies in 2012/13 where taxable income exceeds £150,000 but the rate will fall to 45% in 2013/14.

Dividend income is taxed at 10% where it falls within the basic rate band and 32.5% where liable at the higher rate of tax. Where income exceeds £150,000, dividends are taxed at 42.5% in 2012/13 and 37.5% in 2013/14.

Planning should be considered before 6 April 2013 where income is expected to exceed £150,000. Deferring income until 2013/14 or reducing income by specific reliefs such as Gift Aid donations and pension contributions should be considered.

Tax bands and rates 2014/15

The basic rate of tax is currently 20%. The band of income taxable at this rate is being reduced from £32,010 to £31,865 so that the threshold at which the 40% band applies will rise from £41,450 to £41,865 for those who are entitled to the full basic personal allowance.

The additional rate of tax of 45% is payable on taxable income above £150,000.

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