Planning for your self assessment tax bill
The UK tax year is 6 April to the following 5 April. So the tax year 2009/10 ends on 5 April 2010.
You will need to complete a self assessment tax return if you are self employed or a limited company director.
Click here to read our free guide on starting a business and registering with HMRC (opens in a new window).
Although the deadline is 31 January for e-filed returns, we recommend that you complete your tax return and submit it to HMRC as early as possible. Click here to download a useful pdf tax return checklist.
A self employed person will pay both income tax and class 4 national insurance (NI) on their profits plus income tax on any other income and capital gains tax on any relevant capital gains in the tax year.
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Tax rates and allowances
Income tax, capital gains tax, and inheritance tax rates and allowances
| per year 1 | 2009-10 | 2010-11 |
| Income tax personal and age-related allowances 2 | ||
| Personal allowance (age under 65) | £6,475 | £6,475 |
| Personal allowance (age 65-74) | £9,490 | £9,490 |
| Personal allowance (age 75 and over) | £9,640 | £9,640 |
| Married couple's allowance * (age 75 and over) | £6,965 | £6,965 |
| Married couple's allowance * - minimum amount | £2,670 | £2,670 |
| Income limit for age-related allowances | £22,900 | £22,900 |
| Blind person’s allowance | £1,890 | £1,890 |
| Capital gains tax annual exempt amount | ||
| Individuals etc. | £10,100 | £10,100 |
| Most trustees | £5,050 | £5,050 |
| Individual inheritance tax allowance | £325,000 | £325,000 |
| Pension schemes allowances | ||
| Annual Allowance | £245,000 | £255,000 |
| Lifetime Allowance | £1,750,000 | £1,800,000 |
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1 The income tax year is 6 April to 5 April. 2 From April 2010, the personal allowance will be gradually withdrawn for income over £100,000 at a rate of £1 of allowance lost for every £2 over £100,000 until it is completely removed. * Married couple's allowance is given at the rate of 10%. |
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Income tax: Taxable bands
| 2009-10 | 2010-11 | |
| Savings starting rate*: 10% | 0 - £2,440 | 0 - £2,440 |
| Basic rate: 20% | 0 - £37,400 | 0 - £37,400 |
| Higher rate: 40% | Over £37,400 | £37,401 - £150,000 |
| Additional rate : 50% | N/A | Over £150,000 |
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* only available if non savings income is less than this amount. |
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Capital gains tax rates
| 2009-10 | 2010-11 | |
| Full rate of CGT | 18% | 18% |
| Entrepreneurs' Relief fraction | 4/9 | 4/9 |
| Net rate for Entrepreneurs | 10% | 10% |
Corporation tax on profits
| per year 1 | 2009-10 | 2010-11 |
| £0-£300,000 | 21% | 21% |
| £300,001 - £1,500,000 | Marginal rate | Marginal rate |
| £1,500,001 or more | 28% | 28% |
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1 The corporation tax year is 1 April to 31 March. |
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Capital Allowances
| per year | 2009-10 | 2010-11 |
| Main writing down allowance | 20% | 20% |
| Special rate writing down allowance | 10% | 10% |
| Temporary first year-allowance | 40% | 0% |
| Annual Investment Allowance 1 | £50,000 | £100,000 |
| 1 Not available on cars and some other types of plant and machinery. | ||
National insurance contributions
| per week (unless stated) | 2009-10 | 2010-11 |
| Lower earnings limit, primary Class 1 | £95 | £97 |
| Upper earnings limit, primary Class 1 | £844 | £844 |
| Upper Accruals point | £770 | £770 |
| Primary threshold | £110 | £110 |
| Secondary threshold | £110 | £110 |
| Employees’ primary Class 1 rate between primary threshold and upper earnings limit | 11% | 11% |
| Employees’ primary Class 1 rate above upper earnings limit | 1% | 1% |
| Employees’ contracted-out rebate - salary-related schemes | 1.6% | 1.6% |
| Employees’ contracted-out rebate - money-purchase schemes | 1.6% | 1.6% |
| Married women’s reduced rate between primary threshold and upper earnings limit | 4.85% | 4.85% |
| Married women’s rate above upper earnings limit | 1% | 1% |
| Employers’ secondary Class 1 rate above secondary threshold | 12.8% | 12.8% |
| Employers’ contracted-out rebate, salary-related schemes | 3.7% | 3.7% |
| Employers’ contracted-out rebate, money-purchase schemes | 1.4% | 1.4% |
| Class 2 rate | £2.40 | £2.40 |
| Class 2 small earnings exception (per year) 1 | £5,075 | £5,075 |
| Special Class 2 rate for share fishermen | £3.05 | £3.05 |
| Special Class 2 rate for volunteer development workers | £4.75 | £4.85 |
| Class 3 rate (per week) | £12.05 | £12.05 |
| Class 4 lower profits limit (per year) | £5,715 | £5,715 |
| Class 4 upper profits limit (per year) | £43,875 | £43,875 |
| Class 4 rate between lower profits limit and upper profits limit | 8% | 8% |
| Class 4 rate above upper profits limit | 1% | 1% |
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1 Those with profits less than, or expected to be less than, the level of the Small Earnings Exception may apply for exemption from paying Class 2 contributions. From April 2011 the proposed increase of 0.5% on both employee and employer National Insurance contributions has been increased to 1%. The threshold will rise correspondingly to eliminate the effect of the increase for those earning £20,000 or less per annum. |
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