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The Chartered Instiute of TaxationSage Accountant Partner

Personal Taxation

Tax Tips and FAQs - below you will find a list of all our Tips and FAQs - click to see the full text and/or answer. You can also select specific sections to filter the information by using the menu options.

Personal Allowances
Personal allowances & higher earners
Pension contributions
Higher Earners & Pension Contributions
Child Trust Fund
Child Tax Credit
Working Tax Credit
Individual Savings Accounts (ISA)
Enterprise Investment Scheme (EIS)
Venture Capital Trust (VCT)
Dividend v’s Salary
Tax Tip & FAQ Home

Personal Allowances

Your personal allowance is the amount you are allowed to earn tax free each year. Make sure you check that you are receiving the correct personal allowance, as it will depend on your age. The personal allowances for the 2011/12 tax year are:- 

                                         
Basic (age 0 – 64)  £7,475
Aged 65 – 74     £9,940
Aged 75 +   £10,090
Blind person’s allowance  £1,980 *
 

* received in addition to the basic personal allowance.


Personal allowances & higher earners

The personal allowance for people earning over £100,000 will be gradually removed from 2010/11 onwards, resulting in a marginal rate of 60% on income between £100,000 and £113,000.  There is also a new 50% tax rate from 6 April 2010 on all income over £150,000.


Pension contributions

An individual will be entitled to tax relief on personal contributions to a pension scheme in any tax year to the higher of £3,600 or 100% of ‘relevant UK earnings’ (broadly employment income or trading profits).  Employers will be entitled to tax relief made on behalf of their employees. 


Higher Earners & Pension Contributions

People earning over £150,000 could face a restriction in the tax relief obtained from their pension contributions from April 2009. 


Child Trust Fund

 Additional contributions of up to £1,200 per year can be made to the fund from other family & friends.  The income or gains arising from the fund are tax free.  The fund is normally accessible for the child at age 18.

The Government announced on 24 May 2010 that it intends to reduce, and then stop, Child Trust payments. For more information please follow this link - http://www.childtrustfund.gov.uk/templates/Page____1147.aspx

 


Child Tax Credit

If you only qualify for Child Tax Credit the income limit is £16,040. If your income is more than this, the child element will be reduced. But your income can be up to £50,000 before the family element is reduced.


Working Tax Credit
If you are aged 25 or over, work at least 30 hours per week and your income is less than £13,190 if you are single and £17,965 if you are a couple you could be entitled to claim working tax credit, even if you don’t have any children.

Individual Savings Accounts (ISA)

From 6th October 2009 the cash ISA limit has increased to £10,200 for people aged 50 and over.  £5,100 of this allowance can be in a cash ISA.  This limit will apply to all investors from 6th April 2010. 


Enterprise Investment Scheme (EIS)

Investment in shares of a qualifying EIS company of up to £500,000 for 2010/11 gives rise to tax relief at 20% of the amount invested. Shares held for at least 3 years will not give rise to a capital gain if sold after this initial qualifying period. You can also roll over a capital gain by investing in shares in an EIS qualifying company.


Venture Capital Trust (VCT)

VCT invest in the shares of unquoted trading companies. Investment in a VCT of up to £200,000 for 2010/11 gives rise to tax relief at 30% of the amount invested so long as the shares are held for at least 5 years. Dividends from the VCT are exempt and capital gains on disposal of the shares in the VCT are also exempt.


Dividend v’s Salary
An appropriate salary/dividend strategy will gain a National Insurance saving.

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