income tax rates and allowances

*Personal Allowance (PA) will be withdrawn at £1 for every £2 by which ‘adjusted income’ exceeds £100,000. There will therefore be no allowance given if adjusted income is £125,000 (2021/22: £125,000) or more.

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†Up to 10% of the PA (2022/23: £1,260; 2021/22: £1,260) can be transferred to a spouse or civil partner who is no more than a basic rate taxpayer.

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**Married Couple’s Allowance is reduced by £1 for every £2 by which adjusted income exceeds the income limit, down to a minimum of £3,640 (2021/22 £3,530)

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§The DTA taxes the first £2,000 of dividend income at nil rather than the rate that would otherwise apply – see rates below. The Personal Savings Allowance (PSA) operates as a nil rate band for interest income.

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The dividend rates were 7.5%, 32.5% and 38.1% in 2021/22.

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General income (salary, pensions, business profits, rent) uses Personal Allowance, basic rate and higher rate bands before savings income (interest).  To the extent that savings income falls in the first £5,000 of the basic rate band, it is taxed at nil rather than 20%. The PSA (see above) will tax interest at nil where it would otherwise be taxable at 20% or 40%.

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Dividends are taxed as the ‘top slice’ of income.