Innes Reid Investments Limited

Income Tax

The highest rate of Income Tax is now 50%, and will apply to taxable income over £150,000 a year.  The tax rate on dividends for those with taxable income over £150,000 will be 42.5%. 

So, there will be three rates of tax for dividends: -

• 10% for those with total taxable income below higher rate threshold (" ordinary rate")
• 32.5% for those with total taxable income between higher rate threshold and £150,000 ("upper rate")
• 42.5% for those with total taxable income exceeding £150,000 ("additional rate")

The highest rates (50% and 42.5%) will also apply to trusts.

In addition, from April 2010 personal allowances will be reduced by £1 for every £2 of adjusted net income over £100,000.  For most people, adjusted net income is net income minus gross contributions to pensions and gross gift aid payments.

Tax rates and allowances for 2010/11 are as previously announced.

*There is 10% starting rate for savings income only, with a limit of £2,440. If an individual’s taxable non-savings income is above this limit then the 10% savings rate will not be applicable.

Tax Rates For Most Trusts (2010/2011)

Gift Aid

For three tax years 2009/10, 2009/10 and 2010/11 charities will be able to claim Gift Aid tax repayments at a rate of 22%, rather than 20%.  This means that every £1 donated is increased by about 28p.  From April 2011, the rate is expected to reduce to 20%.    

National Insurance Contributions

From April 2011,grandparents and other family members of working age will be able to gain National Insurance credits toward the basic State Pension for caring for young children.  This change could particularly help women in their 50s who often lose out on pension provision.

All 2010/11 National Insurance Contributions are as previously announced, and are summarised below:

 Class 1 Employee (Not contracted-Out of State Second Pension) (S2P)

Class 1A Employer

On car, fuel and most other taxable benefits is 12.8% 

Self-employed (if earnings are over £5,075 pa)