This table has been updated to reflect the changes introduced in the 2008 budget. Some of these figures (marked with an **) are awaiting confirmation and may be subject to revisions at a later stage.
| Tax rates |
Comments |
2008/09 |
2007/08 |
| Exempt amount band |
* see below |
£2,230 |
| Tax rate |
N/A |
10% |
| Basic rate band |
£34,800** |
£32,370 |
| Basic rate |
20% |
22% |
| Savings rate |
* see below |
20% |
| Dividend ordinary rate |
10% |
10% |
| Higher income level threshold |
£34,800** |
£34,600 |
| Higher tax rate |
40% |
40% |
| Dividend upper rate |
32.5% |
32.5% |
| * The 10% exempt amount band is applicable to savings income up to £2,320. It is not applied where non-savings income is greater than this amount. |
|
|
| 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 |
£6,035** |
£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| The age-related allowances are progressively withdrawn if income exceeds |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 |
£6,035** |
£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% |
|
Commnets
1. The relevant age is the number of complete years at the last day of the tax year. The married couples allowance will be based on the age of the eldest person in the relationship.
2. The married couples allowance is only applicable in situations where at least one spouse was borne before 6 April 1935.
3. In situations where the level of income is greater than £21,800 (£20,900 2007/08), the amount of higher rate personal allowance given is reduced by £1 for each amount of £2 over and above the £21,800 threshold until the standard personal allowance level is reached. For married couples, their allowance is reduced at a rate of £0.1 for every £2 of income which exceeds the limit, until the basic level of £254 (£244 2007/08) is attained. Pre 5 December 2005, the husband’s income was used to determine the level of allowance. Post 5 December, the partner with the higher income is used.
4. Where a person creates a number of trusts, the basic rate allowances shall be apportioned equally to a minimum level of £200 for each trust in operation.
5. The EU commission must approve the proposed date of commencement for the increase for 2008/09.
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