Tax Rates 2004   Tax Rates 2004 Graphic
About This Guide Income Tax Capital Gains Tax Corporation Tax Main Capital Allowances Value Added Tax Inheritance Tax Vehicle Benefits Mileage Allowance National Insurance Contributions Key Dates And Deadlines Pension Premiums Profit Related Pay Charitable Giving Savings and Investments Some Useful Rates Stamp Taxes
Income Tax

Tax rates Note 2004/05 2003/04
Starting rate band to £2,020 £1,960
Tax rate 10% 10%
Basic rate band - next £29,380 £28,540
Non-savings rate 22% 22%
Savings rate 20% 20%
UK dividend rate 10% 10%
Higher rate - taxable income over £31,400 £30,500
Higher tax rate 40% 40%
UK dividend rate 32.5% 32.5%
Trusts    
Tax rate 40% 34%
UK dividend rate 32.5% 25%
Allowances that reduce taxable income    
Personal allowance (PA) under 65 1 £4,745 £4,615
  65 to 74 1,3 £6,830 £6,610
  75 and over 1,3 £6,950 £6,720
  Blind person's allowance   £1,560 £1,510
Allowances that reduce tax    
Married couple's allowance (MCA)      
Tax reduction 70 to 74 1,2,3 £572.50 £556.50
  75 and over 1,2,3 £579.50 £563.50
The age-related allowances are progressively withdrawn if income exceeds £18,900 £18,300
Minimum PA £4,745 £4,615
Minimum MCA tax reduction £221 £215
Tax Shelters    
Enterprise Investment Scheme (EIS) up to 4 £200,000 £150,000
Venture Capital Trust (VCT) up to 5 £200,000 £100,000
Golden Handshake max. £30,000 £30,000
Rent a Room - exempt on gross annual rent up to £4,250 £4,250

Notes

  1. Ages are as the end of the tax year. Ages for the MCA relate to the elder of husband or wife.


  2. MCA is available only to those couples where at least one spouse was born before 6 April 1935.


  3. The higher rates of personal allowances are reduced by £1 for each £2 of excess income over £18,900 (2003/04 £18,300) until the basic allowance is reached. Similar limits apply to the married couple's allowance: the loss of tax reduction is 10p for each £2 of excess income (only the husband's income is taken into account) until the minimum of £221 (2003/04 £215) is reached.


  4. Subscription for new ordinary shares - 20% income tax relief. Also such investments by subscription are eligible for deferral of capital gains tax on unlimited gains re-invested.


  5. Subscriptions for new ordinary shares - 20% income tax relief. For 2004/05 and 2005/06, additional income tax relief of 20% will be paid direct to the VCT.