The Finance Act 2009 introduced the necessary legislation to enable the top rate of tax to be increased to 50% on taxable income in excess of £150,000 in any tax year. Although this will probably be introduced from April 2010, 50% will not actually be the top rate of tax next year. Those with income of a little more than £100,000 will suffer a withdrawal of their personal allowances. For every £2 over the income limit the personal allowance will reduce by £1, meaning that affected taxpayers will bear 60% effective rate of tax on a band of income of around £13,000, returning to 40% thereafter. The income for this purpose is after any reduction for pension contributions and gross charitable donations, so these can be particularly tax efficient next year. This may impact on your desire to make charitable donations at the end of 2009/10 which would be more tax efficient in early 2010/11.
Tags: HMRC, Income tax allowances, Personal tax return, tax relief, UK Corporation Tax
