News: January 2014
Personal allowance and tax bands
The promised hike in the personal allowance to £10,000 is confirmed for the tax year 2014/15.
The basic rate limit is £31,865 for 2014/15. This means that 40% taxpayers (if taxable income does not exceed £100,000) will partly benefit from the increase in personal allowance.
The 45% band for 2014/15 applies to taxable income over £150,000.
As is well known, there is a nasty tax trap by reference to the gradual withdrawal of the personal allowance if taxable income exceeds £100,000.This is via a reduction of £1 of allowance for every £2 of excess taxable income. For 2014/15 the trap is even wider than before with the increase in personal allowance to £10,000:
|Taxable income||Marginal rate|
|£100,000 to £120,000||60%|
|£120,001 to £149,999||40%|
If your taxable income is ordinarily in the 60% marginal band we can advise on possible solutions.
ISA limits 2014/15
- £11,880 (including cash maximum of £5,940)
- Junior ISAs = £3,840