You can earn up to the following amounts in the 2009-2010 tax year without having to pay income tax:
| Age | Earnings |
|---|---|
| Under 65 (including children) | £6,475 |
| 65-74 | £9,490 |
| 75+ | £9,640 |
Notes: There is an additional allowance for married couples, where either spouse was born before 5 April 1935, but tax relief only applies at the rate of 10%. The so called "age allowance" for the over 65s is reduced by £1 for every £2 of income above the limit until the basic allowance of £6,475 is reached.
The tax rates for earnings above the allowance (with 2010/11 50% tax bracket included for reference)
| Amount above allowance | Income | Dividends | Interest |
|---|---|---|---|
| £1 - £37,400 More than £37,400 Over £150,000 (from 2010) | 20% 40% 50% | 10% 32.5% 42.5% | 20% 40% 50% |
Notes:
(i) From April 2010, persons earning more than £100,000 will have their personal allowance gradually eliminated on a taper basis; by £1 for every £2 above the limit. The allowance entirely disappears, in effect, on an income of around £112,000
(ii) As of July 2009, British companies shall be exempt on the majority of foreign dividends.
(iii) There remains a 10% rate for savings income only, but if non-savings income is above the limit (£0 - £2,440) it does not apply
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