IT Contractor Tax - Accountants for Contractors

Here are the most relevant tax rates and allowances for the 2011/12 financial year.

You can now also access the rates for the 2012/13 tax year following Budget 2012 here.

Corporation Tax

The small profits rate paid by contractor companies has been cut from 21% to 20% from 1st April 2011.

The main rate of Corporation Tax (paid by larger companies) has been cut from 28% to 26%, and is set to fall by 1% each year until it reaches 23%

Value Added Tax

The standard rate of VAT remains at 20%.

The VAT registration threshold from 1st April 2011 is £73,000. The de-registration threshold is £71,000.

Income Tax

The Personal Allowance rises by £1,000 to £7,475.

For incomes of £100,000, the value of the personal allowance is removed by £1 for every £2 over the threshold.

Income Tax - Taxable Bands

The basic 20% rate of income tax applies between £0 and £35,000.

The higher 40% rate applies between £35,001 and £150,000.

The additional 50% rate applies on income above £150,000.

National Insurance (NICs)

The employers' NIC rate rises from 12.8% to 13.8% from 6th April 2011. The employee's NIC rate rises from 11% to 12%.

Dividend Tax

The tax rates on dividends remains unchanged for the 2011/12 tax year:

10% for dividend income up to the £35,000 threshold.

32.5% for higher rate income between £35,001 and £150,000.

42.5% for additional rate income over £150,000

Pensions Savings - Tax Relief

The lifetime allowance is £1.8m (this will be cut to £1.5m in 2012/13).

The annual allowance has been cut from £255,000 to £50,000.

Capital Gains Tax

The standard CGT rate for individuals remains at 18% (basic rate), and 28% (higher rate).

The lifetime allowance for Entrepreneurs' Relief has been doubled from £5m to £10m.

Inheritance Tax

The IHT threshold remains at £325,000. The IHT above this threshold is 40%.

From April 2012, a reduced rate of IHT of 36% will be introduced where 10% of more of the net estate is left to charity

ISAs

The ISA limit is £10,680 (from £10,200), £5,340 of which can be saved in cash.

Approved Mileage Allowance Payments (AMAPs)

The standard rate will rise from 40p to 45p from April 6th 2011 for the first 10,000 miles, and 25p thereafter.