Income Tax, National Insurance (NIC), Dividend Tax rates

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Income Tax, National Insurance (NIC), Dividend Tax rates - 2009/10

Posted Apr 5, 2009

Alongside a small increase in the personal allowance and taxable bands for the 2009/10 tax year, the Government has once again increased NIC rates significantly.

The tax rates on limited company dividends remain the same for 2009/10.

The small companies' corporation tax rate remains at 21%.

The 15% standard VAT rate and revised flat rate VAT rates remain in place until 31st December 2009.

We'll add further useful tax tables for the 2009/10 tax year shortly.

Personal allowance - 2009/10

	2008-09	2009-10
Personal Allowance	£6,035	£6,475

Income tax rates and taxable bands

	2008-09	2009-10
Starting rate for savings: 10%*	£0-£2,320	£0-£2,440
Basic rate: 20%	£0-£34,800	£0-£37,400
Higher rate: 40%	Over £34,800	Over £37,400

* From 2008-09 there is a 10% starting rate for savings income only. If your non-savings income is above this limit then the 10% starting rate for savings will not apply.

Dividend Tax Rates

The rates available for dividends are the 10% ordinary rate and the 32.5% dividend upper rate. Read our dedicated article on how dividends are taxed for more information.

National Insurance Contributions (NICs)

Also read our contractors' guide to national insurance.

£ per week	2007-08	2008-09	2009-10
Lower earnings limit, primary Class 1	£87	£90	£95
Upper earnings limit, primary Class 1	£670	£770	£844
Upper accruals point	N/A	N/A	£770
Primary threshold	£100	£105	£110
Secondary threshold	£100	£105	£110
Employees’ primary Class 1 rate between primary threshold and upper earnings limit	11%	11%	11%
Employees’ primary Class 1 rate above upper earnings limit	1%	1%	1%
Employers’ secondary Class 1 rate above secondary threshold	12.8%	12.8%	12.8%
Class 2 rate	£2.20	£2.30	£2.40
Class 2 small earnings exception	£4,635 per year	£4,825 per year	£5,075 per year
Class 3 rate	£7.80	£8.10	£12.05
Class 4 lower profits limit	£5,225 per year	£5,435 per year	£5,715 per year
Class 4 upper profits limit	£34,840 per year	£40,040 per year	£43,875 per year
Class 4 rate between lower profits limit and upper profits limit	8%	8%	8%
Class 4 rate above upper profits limit	1%	1%	1%

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