Reduced Tax Liability (Marginal Relief)

This is a follow on from on form our previous article on the age exemption limits. Where your income is slightly over the thresholds mentioned then your tax liability is calculated in two different ways.

The first method taxes the excess income over the tax free threshold at a flat rate of 40% ignoring normal tax credits and reliefs.

The second method calculates your tax liability in the normal way using your tax credits and reliefs. You pay whichever method gives the lowest tax liability.

If all of this sounds confusing do not worry our tax calculator will do all of this automatically for you once you have entered your year of birth in the profile section.

There is no marginal tax relief for individuals under 65 years of age from 2008 onwards.