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Wednesday, 3 October 2012

Income Tax and National Insurance rates for 2010-11

  • Published: Tuesday, 22 June 2010

The government announced rates and allowances for Income Tax and National Insurance for the 2010-11 tax year in the Pre-Budget Report in December 2009. The figures on this page also reflect changes made in the March 2010 Budget.

2011-12: rates and allowances for this year

HMRC has published the tax rates and tax bands for the 2011-12 tax year.

For details of Income Tax rates and allowances and National Insurance contributions for this year, follow the links below.

Changes announced in the June 2010 Budget

Some changes to personal allowances and National Insurance contributions were announced in the 22 June Budget.

  • personal allowances - the personal allowance for under 65s will be increased by £1,000 in April 2011. This will benefit 23 million taxpayers and remove hundreds of thousands of people from Income Tax altogether
  • other Income Tax allowances - no other allowance rates for 2011-12 were announced in the Budget. (These rates are normally announced in the autumn.)

Allowances 

 2010-11

 Change

 2011-12

 Personal allowance (age under 65)

 £6,475

 +£1,000

 £7,475

  • employers' National Insurance contributions threshold - the threshold at which employers start to pay National Insurance will be raised by £21 per week above indexation in April 2011
  • employers' National Insurance contributions exemption – outside the Greater South East region, new businesses will be exempted from up to £5,000 of employer contributions for each of their first 10 employees hired

More details of tax changes have been published in the Budget June 2010 pages.

Income Tax personal and age-related allowances 2009-11

All personal and age-related Income Tax allowances are to be frozen in 2010-11.

Allowances

2009-10

Change

2010-11

Personal allowance (age under 65)

£6,475

-

£6,475

Personal allowance (age 65-74)

£9,490

-

£9,490

Personal allowance (age 75 and over)

£9,640

£9,640

Married couple's allowance* (age 75 and over)

£6,965

-

£6,965

Married couple's allowance* - minimum amount

£2,670

-

£2,670

Income limit for age-related allowances

£22,900

-

£22,900

Blind person’s allowance

£1,890

-

£1,890

* Married couple's allowance is given at the rate of 10 per cent.

Income Tax - taxable bands 2009-11

2009-10

£ per year

2010-11

£ per year

Starting savings rate: 10%*

£0-£2,440

Starting savings rate: 10%*

£0-£2,440

Basic rate: 20%

£0-£37,400

Basic rate: 20%

£0-£37,400

 

Higher rate: 40%

 

Over £37,400

 

Higher rate: 40%

 

£37,401-£150,000

 

 

Additional rate: 50%

Over £150,000


*There is a 10p starting rate for savings income only. If an individual's non-savings taxable income exceeds the starting rate limit, the 10p starting rate for savings will not be available for savings income.

Higher rate of Income Tax to be frozen in 2012-13

The government has announced that the point at which individuals start to pay the higher rate of Income Tax (known as the higher rate threshold) will be frozen in 2012-13 at 2011-12 levels.

The upper earnings limit and the upper profits limit for National Insurance will continue to be aligned with the higher rate threshold. The personal allowance will be indexed in line with inflation in 2012-13.

Additional higher rate of Income Tax from 2010

From April 2010 a new rate of Income Tax of 50 per cent will apply to income over £150,000. Also, the Income Tax Personal Allowance will be reduced for those with incomes over £100,000, tapering down to zero.

National Insurance contributions 2009-11

 £ per week (unless stated) 2009-10 Change  2010-11
Lower earnings limit (primary Class 1) £95   +£2 £97
Upper earnings limit (primary Class 1) £844  - £844
Upper accruals point £770 £770
Primary threshold £110 - £110
Secondary threshold £110 - £110
Employees’ primary Class 1 rate between primary threshold and upper earnings limit 11% - 11%
Employees’ primary Class 1 rate above upper earnings limit 1% - 1%
Employees’ contracted-out rebate - salary-related schemes 1.6% - 1.6%
Employees’ contracted-out rebate - money-purchase schemes 1.6% - 1.6%
Married women’s reduced rate between primary threshold and upper earnings limit 4.85% - 4.85%
Married women’s rate above upper earnings limit 1% - 1%
Employers’ secondary Class 1 rate above secondary threshold 12.8% - 12.8%
Employers’ contracted-out rebate, salary-related schemes 3.7% - 3.7%
Employers’ contracted-out rebate, money-purchase schemes 1.4% - 1.4%
Class 2 rate £2.40 - £2.40
Class 2 small earnings exception (per year) £5,075 - £5,075
Special Class 2 rate for share fishermen £3.05 - £3.05
Special Class 2 rate for volunteer development workers £4.75 +£0.10 £4.85
Class 3 rate (per week) £12.05 - £12.05
Class 4 lower profits limit (per year) £5,715 - £5,715
Class 4 upper profits limit (per year) £43,875 - £43,875
Class 4 rate between lower profits limit and upper profits limit 8%  - 8%
Class 4 rate above upper profits limit  1%   -  1% 

 

Changes to National Insurance contributions from 2011

The government has announced that the employee, employer and self-employed rates of National Insurance contributions (NICs) will increase by 0.5 per cent from April 2011 in addition to the 0.5 per cent increase announced in 2008.

The level at which people start to pay NICs will increase in April 2011 by £570 above the level previously announced. Those paying the standard employee rate and earning under £20,000 will pay less NICs overall as a result of these changes.

Additional links

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Budget June 2010

Full coverage of the new government's first Budget

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