|
Income Tax
| Tax rates |
Note |
2008/09 |
2007/08 |
| Starting rate band |
* see below |
£2,230 |
| Tax rate |
N/A |
10% |
| Basic rate band |
£36,000 |
£32,370 |
| Basic rate |
20% |
22% |
| Savings rate |
* see below |
20% |
| Dividend ordinary rate |
10% |
10% |
| Higher rate - taxable income over |
£36,000 |
£34,600 |
| Higher tax rate |
40% |
40% |
| Dividend upper rate |
32.5% |
32.5% |
| * 10% starting rate for savings income up to £2,320. Not applicable if taxable non-savings income exceeds £2,320. |
|
|
| Trusts |
|
|
| For interest in possession trusts on all income, and other trusts on the first £1,000 of income ("standard rate band"): |
|
|
| dividend ordinary rate |
4 |
10% |
10% |
| savings income |
4 |
20% |
20% |
| other income |
4 |
20% |
22% |
| Income of other trusts above £1,000 is taxed at the special trust rates: |
|
|
| rate applicable to trusts |
|
40% |
40% |
| dividend trust rate |
|
32.5% |
32.5% |
| Allowances that reduce taxable income |
|
|
| Personal allowance (PA) |
under 65 |
1 |
£5,435 |
£5,225 |
| |
65 to 74 |
1,3 |
£9,030 |
£7,550 |
| |
75 and over |
1,3 |
£9,180 |
£7,690 |
| |
Blind person's allowance |
|
£1,800 |
£1,730 |
| Allowances that reduce tax |
|
|
| Married couple's allowance (MCA) |
|
|
|
| Tax reduction |
74 |
1,2,3 |
£653.50 |
£628.50 |
| |
75 and over |
1,2,3 |
£662.50 |
£636.50 |
| The age-related allowances are progressively withdrawn if income exceeds |
£21,800 |
£20,900 |
| Minimum PA |
£5,435 |
£5,225 |
| Minimum MCA tax reduction |
£254 |
£244 |
| Tax Shelters |
|
|
| Enterprise Investment Scheme (EIS) up to |
5 |
£500,000 |
£400,000 |
| Venture Capital Trust (VCT) up to |
£200,000 |
£200,000 |
| Golden Handshake max. |
£30,000 |
£30,000 |
| Rent a Room - exempt on gross annual rent up to |
£4,250 |
£4,250 |
| Construction Industry Scheme deduction rate: |
|
|
| Standard (registered) |
20% |
20% |
| Higher (not registered) |
30% |
30% |
|
Notes
- Ages are as the end of the tax year. Ages for the MCA relate to the elder of spouse or civil partner
- MCA is available only to those couples where at least one spouse or civil partner was born before 6 April 1935.
- The higher rates of personal allowances are reduced by £1 for each £2 of excess income over £21,800 (2007/08 £20,900) until the basic allowance is reached. Similar limits apply to the married couple's allowance: the loss of tax reduction is 10p for each £2 of excess income until the minimum of £254 (2007/08 £244) is reached. (For couples married before 5 December 2005, only the husband's income is taken into account. For those married on or after 5 December 2005 or in a civil partnership, only the higher earner’s income is taken into account).
- Where there are several trusts created by the same settlor, the "standard rate band" is divided equally between them, subject to a minimum band of £200 for each trust.
- Start date for 2008/09 increase is subject to European Commission approval.
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