Income Tax Rates
|
2008/09
|
2007/08
|
Band
£ |
Rate
% |
Band
£ |
Rate
% |
| 0 - 2,320 |
10** |
0 - 2,230 |
10 |
| 2.321 - 34,800* |
20*** |
2,231 - 34,600 |
22*** |
| Over 34,800* |
40† |
Over 34,600 |
40† |
* As announced on 13 May 2008 (to be confirmed)
** Only applicable to dividends and savings income.
*** Except dividends (10%) and, in 2007/08, savings income (20%).
† Except dividends (32.5%).
Other income taxed first, then savings income and finally dividends.
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Income Tax Reliefs
|
|
2008/09
£
|
2007/08
£
|
| Personal allowance |
- under 65 |
6,035*
|
5,225
|
|
- 65 - 74† |
9,030
|
7,550
|
|
- 75 and over† |
9,180
|
7,690
|
| Married couple's allowance (relief at 10%) |
- aged less than 75 and born before 6.4.35† |
6,535
|
6,285
|
|
- 75 and over† |
6,625
|
6,365
|
|
- min. amount |
2,540
|
2,440
|
| *As announced on 13 May 2008 (to be confirmed) |
| † Age allowance income limit |
|
21,800
|
20,900
|
| (Reduce age allowance by £1 for every £2 of excess income over £21,800.) |
| Blind person’s allowance |
|
1,800
|
1,730
|
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Tax Credits
|
2008/09
£ |
2007/08
£ |
Working Tax Credit
Basic element - max. |
1,800 |
1,730 |
Childcare element
80% of eligible costs up to £175 per week (£300 if two or more children). |
Child Tax Credit (CTC)
Child element |
|
|
| per child - max. |
2,085 |
1,845 |
| Family element |
545 |
545 |
| Baby addition |
545 |
545 |
Reductions in maximum rates
39% (37%) of income above £6,420* (£5,220*) p.a.
*If only CTC is claimed, the threshold is £15,575 (£14,495) p.a. The family element of CTC is not reduced unless income is more than £50,000 p.a. when it is reduced by £1 for every £15 of additional income.
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Pension Premiums
2008/09 and 2007/08
- Tax relief available for personal contributions: higher of £3,600 (gross) or 100% of relevant earnings.
- Employers will obtain tax relief on employer contributions if they are paid and made ‘wholly and exclusively’. Tax relief for large contributions may be spread over several years.
- Any contributions in excess of £235,000 (£225,000), whether personal or by the employer, may be subject to income tax on the individual at 40%.
- No carry back of pension contributions.
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Car and Fuel Benefits
Company cars 2008/09 |
| CO2 emissions (gm/km) (round down to nearest 5gm/km) |
% of car’s list price taxed |
Fuel benefit (£16,900 x %)
£ |
| up to 135 |
15 |
2,535 |
| 140 |
16 |
2,704 |
| 145 |
17 |
2,873 |
| 150 |
18 |
3,042 |
| 155 |
19 |
3,211 |
| 160 |
20 |
3,380 |
| 165 |
21 |
3,549 |
| 170 |
22 |
3,718 |
| 175 |
23 |
3,887 |
| 180 |
24 |
4,056 |
| 185 |
25 |
4,225 |
| 190 |
26 |
4,394 |
| 195 |
27 |
4,563 |
| 200 |
28 |
4,732 |
| 205 |
29 |
4,901 |
| 210 |
30 |
5,070 |
| 215 |
31 |
5,239 |
| 220 |
32 |
5,408 |
| 225 |
33 |
5,577 |
| 230 |
34 |
5,746 |
| 235 and above |
35 |
5,915 |
Company cars
- For diesel cars add a 3% supplement but maximum still 35%. Euro IV diesel cars registered before 1 January 2006 do not suffer the 3% supplement.
- Discounts apply to certain environmentally friendly cars.
- From 2008/09 a new 10% rate applies to non-electric cars with emissions of no more than 120gm/km. Environmentally friendly discounts do not apply to these cars but the diesel supplement does.
- For cars registered before 1 January 1998 the charge is based on engine size.
- The list price includes accessories and is subject to an upper limit of £80,000.
- The list price is reduced for capital contributions made by the employee up to £5,000.
Fuel benefit
- The fuel benefit charge is proportionately reduced if provision of private fuel ceases part way through the year.
- The fuel benefit is reduced to nil only if the employee pays for all private fuel.
Van benefit per vehicle |
| 2008/09 and 2007/08 |
Van benefit £3,000
Fuel benefit £500 |
| The charges will not apply if a ‘restricted private use condition’ is met throughout the year. |
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Mileage Allowance Payments
| Cars and vans |
2008/09 and 2007/08
Rate per mile
|
| Up to 10,000 miles |
40p |
| Over 10,000 miles |
25p
|
| Bicycles |
20p
|
| Motorcycles |
24p |
These rates represent the maximum tax free mileage allowances for employees using their own vehicles for business. Any excess is taxable. If the employee receives less than the statutory rate, tax relief can be claimed on the difference.
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Individual Savings Accounts (ISAs)
|
2008/09
|
£ |
Overall investment limit |
|
|
7,200 |
Comprising |
|
- cash up to |
3,600 max. |
|
|
- balance in stocks and shares |
7,200 max. |
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Corporation Tax
|
Year to 31.3.08 |
Year to 31.3.07 |
|
Profits band
£ |
Rate
% |
Profits band
£ |
Rate
% |
| Small companies rate |
0 - 300,000 |
20 |
0 - 300,000 |
19 |
| Marginal (small companies) rate |
300,001 - 1,500,000 |
32.50 |
300,001 - 1,500,000 |
32.75 |
| Full rate |
Over 1,500,000 |
30 |
Over 1,500,000 |
30 |
| Small companies fraction |
|
1/40 |
|
11/400 |
The profits limits are reduced for accounting periods of less than 12 months and for a company with associated companies.
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Capital Allowances
Plant and machinery - Annual Investment Allowance (AIA)
The AIA gives a 100% write-off on most types of plant and machinery costs, including integral features and long-life assets but not cars, of up to £50,000 p.a. Any costs over the AIA fall into the normal capital allowance pools at either 10% or 20%.
The AIA applies to expenditure incurred on or after 6 April 2008 (1 April 2008 for companies) by all businesses. Special rules apply for accounting periods straddling these dates. The £50,000 limit may need to be shared between certain businesses under common ownership.
Other plant and machinery allowances
The annual rate of allowance is 20% (25%) from 6 April 2008 (1 April 2008 for companies). The 20% rate also applies to cars, with an overriding maximum of £3,000 per car. Special rules apply for accounting periods straddling these dates. First year allowances are abolished except a 100% allowance may still be available on certain energy efficient plant and cars.
A new 10% rate applies to expenditure incurred on integral features and on long life assets on or after 6 April 2008 (1 April 2008 for companies). Long life asset expenditure brought forward will obtain the 10% rate (6%), with special rules applying for accounting periods straddling these dates.
Industrial and agricultural buildings and hotels
The annual rate of allowance is 3% (4%) from 6 April 2008 (1 April 2008 for companies). Special rules apply for accounting periods straddling these dates.
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Value Added Tax
| Standard rate |
17.5% |
| Reduced rate |
5% |
Annual Registration Limit - from 1.4.08
(1.4.07 - 31.3.08 £64,000) |
£67,000 |
Annual Deregistration Limit - from 1.4.08
(1.4.07 - 31.3.08 £62,000) |
£65,000 |
|
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Capital Gains Tax
|
|
2008/09
|
2007/08
|
| Individuals |
|
£
|
£
|
| Exemption |
|
9,600 |
9,200 |
For 2008/09, balance of gains charged at 18%.
For 2007/08, balance of gains (reduced by taper relief*) charged as top slice of income (at savings rates i.e. 10%, 20% or 40%).
|
| Trusts |
|
|
|
| Exemption |
|
4,800
|
4,600
|
| Balance of gains (reduced by taper relief* for 2007/08). |
18%
|
40%
|
*Taper relief abolished for gains arising on or after 6 April 2008.
Entrepreneurs’ Relief
For gains arising on or after 6 April 2008, the first £1m of qualifying gains are charged at an effective rate of 10%. Gains in excess of £1m are charged at 18%. |
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Inheritance Tax
|
|
Chargeable transfers
|
Death rate
%
|
Lifetime rate
%
|
2008/09
£’000
|
2007/08
£’000
|
|
Nil
|
Nil
|
0 - 312*
|
0 - 300*
|
|
40
|
20
|
Over 312*
|
Over 300*
|
| *Potentially increased for surviving spouses or civil partners who die on or after 9 October 2007. |
| Reliefs |
|
|
|
|
| Annual exemption |
£3,000 |
Marriage |
- parent |
£5,000 |
| Small gifts |
£250 |
|
- grandparent |
£2,500 |
|
|
|
- bride/groom |
£2,500 |
|
|
|
- other |
£1,000 |
|
|
|
|
|
|
| Reduced charge on gifts within seven years of death |
| Years before death |
0-3
|
3-4
|
4-5
|
5-6
|
6-7
|
| % of death charge |
100
|
80
|
60
|
40
|
20
|
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Stamp Duty & Stamp Duty Land Tax
Land and buildings (on full consideration paid)
|
Rate |
Residential property* |
Non-residential |
Nil
1%
3%
4% |
Disadvantaged areas |
Other |
£ |
£ |
£ |
0 - 150,000*
150,001* - 250,000
250,001 - 500,000
Over 500,000 |
0 - 125,000*
125,001* - 250,000
250,001 - 500,000
Over 500,000 |
0 - 150,000
150,001 - 250,000
250,001 - 500,000
Over 500,000 |
* £175,000 for transactions with an effective date on or after 3 September 2008 and before 3 September 2009.
Shares and securities - rate 0.5%.
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National Insurance
Class 1 (employed)
contracted in |
2008/09 Rates |
| Weekly earnings |
Employer
|
Employee
|
| Up to £105 |
Nil*
|
Nil*
|
£105.01 - £770 |
12.8%**
|
11%**
|
| Over £770 |
12.8%**
|
£73.15 +1%***
|
* Entitlement to contribution-based benefits retained for earnings between £90.01 and £105 per week.
** On earnings above £105.
*** On earnings above £770. |
|
|
|
Class 1A (employers) |
12.8% on employee taxable benefits |
Class 1B (employers) |
12.8% on PAYE Settlement Agreements |
Class 2 (self-employed) |
flat rate per week £2.30
small earnings exception p.a. £4,825 p.a. |
Class 3 (voluntary) |
flat rate per week £8.10 |
Class 4 (self-employed) |
8% on profits between £5,435 and £40,040 plus 1% on profits over £40,040 |
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Main Social Security Benefits
| Weekly benefit |
|
2008/09
|
2007/08
|
| Basic retirement pension |
- single person |
£90.70
|
£87.30
|
|
- married couple |
£145.05
|
£139.60
|
|
|
|
|
| Statutory pay rates - average weekly earnings £90 (£87) or over |
| Statutory Sick Pay |
£75.40
|
£72.55
|
| Statutory Maternity Pay |
|
|
| - First six weeks |
90% of weekly earnings
|
| - Next 33 weeks |
£117.18*
|
£112.75*
|
| Statutory Paternity Pay - two weeks |
£117.18* |
£112.75* |
| Statutory Adoption Pay - 39 weeks |
£117.18* |
£112.75* |
* Or 90% of weekly earnings if lower.
|
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Self Assessment: Key Dates 2007/08
31 July 2008 - Second payment on account for 2007/08.
5 October 2008 - Deadline for notifying HMRC of new sources of income if no tax return has been issued for 2007/08.
31 October 2008 - Deadline for submission of 2007/08 non-electronic returns. Also, the deadline for submission of 2007/08 returns requiring HMRC calculation and where the taxpayer wants a balancing payment (below £2,000) collected through their 2009/10 PAYE code.
31 January 2009 - Deadline for filing electronic tax returns for 2007/08.
Balancing payment due for 2007/08. First payment on account due for 2008/09.
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Disclaimer
The information in this document is based upon the 2008 Budget and other announcements and may be subject to amendment by the Finance Act.
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