| The Chancellor has
not only brought forward proposals
which were to take place in 2011, he
has also made changes to his original
announcements. From 6 April 2010 the
personal allowance, currently £6,475,
will be subject to an income limit of
£100,000. An individual’s personal
allowance will be reduced by £1 for
every £2 of adjusted net income above
the income limit. The personal
allowance will be potentially reduced
to nil from this income limit instead
of the proposed two stage reduction
announced last year.
Adjusted net income for these
purposes is broadly all income after
adjustment for pension payments,
charitable giving and relief for
losses.
Instead of the proposed 45% top
rate of tax in 2011, a new rate of
income tax will be introduced of 50%
from 6 April 2010. This will apply to
taxable income above £150,000.
Dividend income is currently taxed
at 10% where it falls within the basic
rate band and 32.5% where liable at
the higher rate of tax. A new rate of
42.5% will be introduced for dividends
which fall into the income band above
£150,000.
Internet link:
HMRC budget note 1 |
