April 03, 2013

Personal Allowance Trap!

You may know, there is a nasty tax trap by reference to the gradual withdrawal of the personal allowance if your taxable income exceeds £100,000.This is via a reduction of £1 of allowance for every £2 of excess taxable income.

For 2013/14 the trap potentially applies to even more taxpayers with the increase in personal allowance to £9,440:

Taxable income Marginal rate
£100,000 to £118,880 60%
£118,881 to £149,999 40%
£150,000 + 45%

For 2014/15 the trap is even wider with the increase in personal allowance to £10,000:

Taxable income Marginal rate
£100,000 to £120,000 60%
£120,001 to £149,999 40%
£150,000 + 45%

If you think you could fall in the this trap, contact Inform Accounting and we can advise you of all the possible ways of keeping well clear.

 

 

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