Tax rates

2002/03 2001/02
Starting rate band to: £1,920
Tax rate : 10%
Basic rate band : - next £27,980
Normal rate : 22%
Savings income rate : 20%
UK dividend income rate : 10%

Higher rate - taxable income over : £29,900
Normal rate : 40%
UK dividend income rate : 32.5%

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2002/03
Allowances that reduce taxable income
Personal allowance under 65 1 £4,615
65 to 74 1,3 £6,100
75 and over 1,3 £6,370
Blind person's allowance £1,480

Allowances that reduce tax
Married couple's allowance
Tax reduction 65 to 74 1,2,3 £546.50
75 and over 1,2,3 £553.50
Children's tax credit
Tax reduction 4 £529.00
Baby rate tax reduction £1,049.00 -

Venture Capital Trusts (VCTs) 5 £100,000
Enterprise Investment Scheme 5 £150,000
Golden Handshake £30,000
Rent a Room - exempt on gross annual rent £4,250

Notes

Ages are as the end of the tax year. Ages for the married couples allowance relate to the elder of husband or wife.

The married couple's allowance is available only to those couples where at least one spouse was born before 6 April 1935.

The higher rates of personal allowances are reduced by £1 for each £2 of excess income over £17,900 (2001/02 £17,600) 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 £211 (2001/02 £207) is reached.

Children's tax credit (CTC) is available to couples or single parents who have at least one child under the age of 16 at the start of the tax year who lives with them for at least part of the tax year. CTC is reduced by £1 for every £15 by which the claimant's taxable income exceeds £29,900 (2001/02 £29,400).

Subscription for new ordinary shares - 20% income tax relief. Also such investments by subscription are eligible for deferral of capital gains tax on gains re-invested (up to £100,000 of gains for VCTs, unlimited for EIS).
Did you know?

That the government raises over £100 billion a year in receipts from income tax.

Beyond 2002/03

From April 2003 the age related personal allowances for those aged 65-74 will be increased to £6,610 and for those aged 75 or over to £240 above indexation.