TAX RATES INCOME TAX RATES Rate Taxable income 2007/08 (£) Taxable income 2008/09 (£) From September (£) 10† Up to 2,230 20 Up to 36,000 34,800 22 2,231 - 34,600 40 Over 34,600 Over 36,000 34,800 Dividends may be taxed at 10% and 32.5%. Rate of income tax for discretionary trusts and accumulation and maintenance trusts: 32.5% for dividend income, 40% for non-dividend income. †Starting rate to be removed in 2008/09 for earned income and pension income, but will remain for savings income to a level of £2,320. INCOME TAX ALLOWANCES Allowance 2007/08 (£) 2008/09 (£) From September (£) Personal 5,225 5,435 6,035 Age allowance age 65 - 74 Personal 7,550 9,030 Married couple’s (1)(2) 6,285 6,535 Age allowance 75 and over Personal 7,690 9,180 Married couple’s (1) 6,365 6,625 Income limit 20,900 21,800 Married couple’s allowance minimum amount (1) 2,440 2,540 Blind person’s allowance 1,730 1,800 ‘Rent-a-room’ 4,250 4,250 (1) Relief is restricted to a 10% tax credit. (2) If born before 6 April 1935. WORKING TAX CREDIT (WTC) and CHILD TAX CREDIT (CTC) Working Tax Credit (1) 2007/08 £ 2008/09 £ Adult element (a) 1,730 1,800 Addition for couple/one parent (a) 1,700 1,770 Working 30 hours or more (a) 705 735 Disability addition 2,310 2,405 Enhanced disability addition 980 1,020 Childcare element - maximum eligible cost 1 child (b) 175 175 - maximum eligible cost 2 or more children (b) 300 300 Return to work (aged 50+) - less than 30 hours 1,185 1,235 - more than 30 hours 1,770 1,840 Child Tax Credit (2) Family element (d) 545 545 - baby addition (d) 545 545 Child element - per child (c) 1,845 2,085 Disabled child addition 2,440 2,540 Enhanced disability addition 980 1,020 Reduction where joint income of the family unit exceeds: Up to £6,420 No reduction £6,421 to £50,000 Withdrawn at 39% of excess applied to (a) then (b) then (c) Over £50,000 Withdrawn at 1 in 15 of excess applied only to (d) (1) Aged over 16 working 16 or more hours per week if responsible for a child, or disabled, or aged over 25 working 30 hours per week. (2) One or more children under 16 or in defined further education. Paid direct to main carer. * Limited to 80% TAX-PRIVILEGED PENSION SAVINGS UNDER PENSION SIMPLIFICATION 2008/09 Single lifetime allowance £1,650,000 Contributions: Tax relief given up to higher of: £3,600; or 100% of relevant earnings (capped at £235,000) Maximum tax free lump sum 25% of the fund (up to a maximum of 25% of the lifetime allowance) On withdrawal, excess funds over lifetime allowance taxed at: 25% when used to buy a pension (which is then subject to individual's highest marginal rate) 55% when taken as lump sum VALUE ADDED TAX Standard rate 17.5% VAT fraction (where included in cost) 7/47 To 31 March 2008 From 1 April 2008 Registration threshold £64,000 £67,000 Optional flat-rate scheme for small businesses is available. NATIONAL INSURANCE CONTRIBUTIONS Employees' Class 1 contributions 2008/09 Total weekly earnings Not contracted out Contracted Out Below £105* NIL NIL £105 - £770 NIL on first £105 plus 11% on band between £105 and £770 NIL on first £105 plus 9.4% on band between £105 and £770 Over £770 As above plus 1% on earnings over £770 As above plus 1% on earnings over £770 Married women’s reduced rate 4.85% on earnings between £105 and £770 per week plus 1% on earnings above £770 per week * Between £90 pw and £105 pw a zero rate applies to protect employees’ contributory benefit entitlement. Employers’ Class 1 contributions 2008/09 Total weekly earnings Not contracted out Contracted out Salary-related schemes Contracted out Money purchase schemes Below £105 NIL NIL NIL £105 - £770 Nil on first £105 plus 12.8% on balance over £105 Nil on first £105 plus 9.1% on balance over £105 Nil on first £105 plus 11.4% on balance over £105 Over £770 Nil on first £105 plus 12.8% on balance over £105 Nil on first £105 plus 9.1% on next £665 plus 12.8% on balance over £770 Nil on first £105 plus 11.4% on next £665 plus 12.8% on balance over £770 Class 2 - Self employed Flat rate £2.30 per week if earnings exceed £4,825 per annum Class 3 - Voluntary Flat rate £8.10 per week Class 4 - Self employed 8% of profits between £5,435 and £40,040 per annum plus 1% on earnings over £40,040 CORPORATION TAX (CT) Financial year to 31 March 2008 31 March 2009 Tax rate 30% 28% Small companies rate 20% 21% Where profits less than £300,000 £300,000 Marginal relief up to £1,500,000 £1,500,000 Marginal relief fraction 1/40 7/400 Effective marginal rate 32.5% 29.75% CAPITAL ALLOWANCES (regime change) 2007/08 2008/09 Plant and machinery - 1st year allowance for small-sized businesses * 50% 100% - 1st year allowance for medium-sized businesses * 40% 100% - annual allowance † 25% 20% - long life assets † 6% 10% Integral fixtures † N/A 10% Limit on allowances for expensive cars £12,000 £12,000 Cars under limit - annual allowance † 25% 20% Cars over limit - maximum allowance per annum £3,000 £3,000 Industrial buildings - annual allowance 4% cost 3% cost Agricultural buildings and works - annual allowance 4% cost 3% cost Expenditure on renovation or conversion of space above shops, etc, and designated energy saving plant and machinery # 100% 100% * 100% Annual Investment Allowance for up to £50,000 incurred on plant and machinery for each unlinked unincorporated business or corporate groups. Expenditure over £50,000 dealt with through standard regime. † Reducing balance. # Special anti-avoidance measures apply. CAR AND FUEL BENEFITS 2008/09 Cars Minimum 15% of list price (emissions level 135g/km CO2 (2007/08: 140g/km CO2)) Increments 1% for each additional 5g/km CO2 emissions over 135g/km CO2 (2007/08: 140g/km CO2) Diesel cars 3% surcharge unless car meets ‘Euro IV’ standard* Maximum 35% of list price Emissions levels for most cars can be found on www.vca.gov.uk CO2 level rounded down to nearest 5g. * Waiver ceases for cars registered on or after 1 January 2006. If no emissions rating   Registered before 1.1.98 Registered after 1.1.98 1400cc or less 15% 15% 1401 - 2000cc 22% 25% 2001cc - or more 32% 35% Fuel Private fuel provided with company car - percentages as above for cars x maximum £16,900. Approved mileage rates for business mileage in own car Cars and vans Per mile 0 - 10,000 miles 40p Over 10,000 miles 25p Advisory mileage rates for business mileage in company car From 1 January 2008 Petrol Diesel LPG 1400cc or less 11p 11p 7p 1401 - 2000cc 13p 11p 8p 2001cc or more 19p 14p 11p CAPITAL GAINS TAX (REGIME CHANGE) 2007/08 2008/09 Tax Rates Individuals 10, 20 or 40% (depending on level of taxable income) 18%* Trusts† and personal representatives 40% 18% Comapnies 40% see CT rates 18% see CT rates Annual exemptions Individuals £9,200 £9,600 Trusts (maximum) £4,600 £4,800 Chattels proceeds exemption £6,000 £6,000 Capital Gains Tax Entrepreneurs’ Relief# - £1 million * Taper relief and indexation relief abolished from 6 April 2008. † If settlor retains interest or may benefit, tax at settlor’s rate instead. Special rules may apply for offshore trusts. # The first £1 million of gains arising in connection with disposals of whole or part of a business, reduced by 4/9ths, giving a tax rate of 10%. CAPITAL GAINS TAX TAPER RELIEF (UNTIL 2007/08 ONLY) Disposal of business assets prior to 6 April 2008 could benefit from relief of up to 75% of the gain. Disposal of non-business assets prior to 6 April 2008 could benefit from relief of up to 40% of the gain. CAPITAL GAINS TAX ENTREPRENEURS’ RELIEF (2008/09 ONWARDS) Disposal of whole or part of a business after 6 April 2008 could benefit from an effective CGT tax rate of 10%. This applies to the first £1 million of gains. INHERITANCE TAX Transfers on or after 6 April 2008 (husband and wife treated separately) Band £ Lifetime rate Death rate 0 - 312,000 NIL NIL Over 312,000 20% 40% Transferable nil-rate band* £312,000 Annual exemption £3,000 Small gifts exemption £250 Wedding gifts exemption Gifts made by - parent £5,000 - remoter ancestor £2,500 - party to marriage £2,500 - other person £1,000 * Unused nil-rate band can be transferred to surviving spouse or civil partner. Available where surviving spouse or civil partner died on or after 9th October 2007. INHERITANCE TAX TAPERING RELIEF Rates for transfers on death also apply to gifts within seven years of death subject to tapering relief. Years between gift and death Reduction in charge 0 - 3 NIL 3 - 4 20% 4 - 5 40% 5 - 6 60% 6 - 7 80% Stamp Duty Stamp Duty was abolished from 1 December 2003 on all transactions except for the following: Transfer of shares & securities (rate unchanged at 0.5%). Certain transactions involving partnership land. STAMP DUTY LAND TAX Stamp Duty Land Tax was introduced to replace Stamp Duty on UK property transactions from 1 December 2003. Percentages applying on the acquisition of property in the UK Residential Non-residential Consideration £ % Consideration £ % 0 - 125,000 NIL 0 - 150,000 NIL 125,001 - 250,000 1% 150,001 - 250,000 1% 250,001 - 500,000 3% 250,001 - 500,000 3% 500,001 plus 4% 500,001 plus 4% Percentage applying on the rental stream arising from the grant of a new lease in the UK Residential Non-residential Relevant rental value £ % Relevant rental value £ % 0 - 125,000 NIL 0 - 150,000 NIL 125,001 plus *1% 150,001 plus *1% Special rates apply to property transactions in disadvantaged areas and new zero carbon homes. * The tax rate only applies to the relevant rental value which exceeds the nil-rate band

Back to Top