Income Tax

Income tax applies to the amount of income after deduction of personal allowances.

Income is taxed in a specific order with savings and dividend income taxed last.

Dividend income and savings income falling within the dividend and savings allowances still form part of total income of an individual.

There are special rates for savings and dividend income falling into above bands of taxable income.

 There is also a starting rate band of £5,000 which is only applicable to savings income. The band is not available if the taxable amount of non-savings income exceeds the SRB. 

No matter what band of tax an individual is paying, everyone is entitled to the dividend allowance

A personal allowance gives an individual an annual amount of income free from income tax.

Income above the personal allowances is subject to income tax.  

The personal allowance will be reduced if an individual's 'adjusted net income' is above £100,000. The allowance is reduced by £1 for every £2 of income above £100,000.

Marriage allowance - 10% of the personal allowance may be transferable between certain spouses.

An individual born before 6 April 1935 may be entitled to a married couple's allowance but this is reduced if 'adjusted net income' is above the married couple's allowance income limit, see additional information below.

Either partner born before 6th April 1935.

Reduce married couples allowance by £1 for every £2 of 'adjusted net income' above this limit.