Income Tax Rate

Savings income is generally treated as the highest part of total income. A 10% starting rate, for savings income only, applies to the extent that such income falls within the first £2,440 of taxable income (£2,440 for 2009/10). If taxable non-savings income exceeds this limit, the 10% rate does not apply. Income from dividends is taxed at 10% within the starting and basic rate bands and at 32.5% in the higher rate band and, for 2010/2011, at 42.5% thereafter. (these rates are applied to the dividend grossed-up by a tax credit of 1/9)