Income Tax

Tax rates	2001/02	2000/01
Lower rate band to	£1,880	£1,520
Tax rate	10%	10%
Basic rate band - next	£27,520	£26,880
Normal rate	22%	22%
Savings income rate	20%	20%
UK dividends rate	10%	10%
Higher rate - taxable income over	£29,400	£28,400
Normal rate	40%	40%
UK dividend income rate	32.5%	32.5%

		Note	2001/02	2000/01
Allowances that reduce taxable income
Personal allowance	under 65	1	£4,535	£4,385
	65 to 74	1,3	£5,990	£5,790
	75 and over	1,3	£6,260	£6,050
	Blind person's allowance		£1,450	£1,400
Allowances that reduce tax
Married couple's allowance
Tax reduction	65 to 74	1,2,3	£536.50	£518.50
	75 and over	1,2,3	£543.50	£525.50
Children's tax credit
Tax reduction		4	£520.00	-
Venture Capital Trusts (VCTs)		5	£100,000	£100,000
Enterprise Investment Scheme		5	£150,000	£150,000
Golden Handshake			£30,000	£30,000
Rent a Room - exempt on gross annual rent			£4,250	£4,250

Notes

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



2. The married couple's allowance is available only to those couples where at least one spouse was aged 65 or over on 5 April 2000.



3. The higher rates of personal allowances are reduced by £1 for each £2 of excess income over £17,600 (2000/01 £17,000) 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 £207 (2000/01 £200) is reached.



4. 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 £29,400.



5. 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 2001/02

The age related personal allowances will be raised by £240 above indexation from April 2003.

The children's tax credit will be raised to £20 per week, up to £1,000 per year, plus indexation for families in the year of a child's birth for children born from 6 April 2002.