|
|
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progressively withdrawn if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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