Tax Rates & Allowances

Income Tax Rates and Bands

Income tax rates are to remain the same to 5 April 2016, with the exception of the savings rate. This will be cut to 0% from 6 April 2015. However, the savings rate only applies if individual's net non-savings taxable income does not exceed the savings rate limit.

The income tax rates and bands have been announced as:

 2013/142014/152015/16
Savings rate: 10%, 0% from 2015/16 0- £2,790 0- £2,880 0 - £5,000
Basic rate: 20% 0 - £32,010 0 - £31,865 0 - £31,785
Higher rate: 40% £32,011 - £150,000 £31,866- £150,000 £31,786 - £150,000
Additional rate: 45% Over 150,000 Over 150,000 Over £150,000

When the personal allowance is taken into account an individual will start to pay tax at 40% when their total income exceeds £41,865 in 2014/15 and £42,385 in 2015/16. This is compared to a 40% threshold of £41,450 in 2013/14. This threshold (and the 45% threshold) can be increased if the taxpayer pays personal pension contributions or makes gift aid donations.

 

Pensions

The following changes will be introduced from 27 March 2014:

In addition the chancellor proposes to change the rules for defined contribution pension schemes from 2015 so that: