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Tax and NI
4. Income Tax
4.1 There are currently two income tax bands (for the tax year 2011/12):
Taxable income (£)Tax rate1-35,00020%35,001 - 150,00040%4.2 The taxable income is reduced by a personal allowance.
- For the tax year 2011/12, the basic personal allowance is £7,475 (more for those over retirement age).
- If you run your own business, and your spouse has no other income, it makes sense for tax purposes to employ him or her on a salary of at least £7,475.
- The basic personal allowance is only available to people earning less than £100,000.Where income is more than £100,000, the amount of the allowance is reduced by £1 for every £2 above the limit.
- From April 2011, this will rise by £1,000 to £7,475.
Labels: Tax
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