...income tax...
Rates & Bands
The Income tax rates for the current year (2007/2008) are shown below;
| Tax Rate |
Tax Band |
| 0% |
£5,225 |
| 10% |
£2,230 |
| 22% |
£32,370 |
| 40% |
The rest |
Income Tax
Income tax is charged on the following sources of income:-
- Employed & self employed
- Pension (both statutory and private)
- Savings & investments
- Land & property
- Certain foreign income
Savings and investment income
Interest on bank and building society interest is taxed at source at 20% unless the tax payer is not liable to income tax whereby a form R85 can be completed and tax is not deducted. This may be applicable to children and the elderly. Higher rate tax payers are required to pay a further 20% tax.
Dividends are deemed to have tax deducted at source at 10%. If you receive a dividend of £900 then this is assumed to be £1,000 gross less £100 in tax. Only higher rate tax payers are required to pay any additional income tax which is 22.5% of the gross dividend or 25% of the amount actually received.