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Income Tax Rates, Rate Limits and Personal Allowances for 2012/13
Saturday, December 10th, 2011
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The Income Tax Act 2007 is the primary piece of legislation which governs the tax that is paid under Pay As You Earn. The Act allows for the Basic Rate limit and personal allowances for people under 65 to increase by indexation each year (the Retail Price Index rate). As income tax is still a temporary tax, Government has to ask for this Act to confirm / reconfirm the rates at which tax will be payable in the next tax year.
This draft legislation:
- Sets the tax rates at 20, 40 and 50%, as now
- Overrides the Act’s provision for the Basic Rate limit to be increased by indexation and sets it at £34,370.00 for 2012/13, as follows:
| Band | 2011/12 | 2012/13 | Change |
| £ | £ | £ | |
| Basic Rate (20%) | 0 – 35,000 | 0 – 34,370 | -630 |
| Higher Rate (40%) | 35,001 – 150,000 | 34,371 – 150,000 | +630 |
| Additional Rate (50%) | Over 150,000 | Over 150,000 | 0 |
- Overrides the provision to increase the Personal Allowance by indexation (RPI), increasing the Allowance by more, as follows:
| 2011/12 | 2012/13 | Change | |
| £ | £ | £ | |
| Personal Allowance | |||
| Under 65 | 7,475 | 8,105 | +630 |
| 65 – 74 | 9,940 | 10,500 | +560 |
| 75+ | 10,090 | 10,660 | +570 |
| Married Couple’s Allowance | |||
| Maximum | 7,295 | 7,705 | +410 |
| Minimum | 2,800 | 2,960 | +160 |
| Income Limit for under 65 Personal Allow’ | 100,000 | 100,000 | 0 |
| Income Limit for age-related Allowance | 24,000 | 25,400 | +1,400 |
| Blind Person’s Allowance | 1,980 | 2,100 | +120 |
Further Information
- HM Treasury - Draft Legislation
