As previously announced there will be a starting rate of 10% for 2008/09 on savings income up to £2,320.
This will not be available if taxable non-savings income exceeds £2,320.
|
Income Tax Rates
|
2008/09
|
2007/08
|
|
Starting Rate Band
|
£2,320
|
£2,230
|
|
Tax Rate
|
* 10%
|
10%
|
|
Basic Rate
|
**£34,800
|
£32,370
|
|
Basic Rate
|
20%
|
22%
|
|
Savings Rate
|
20%
|
20%
|
|
Dividend Ordinary Rate
|
10%
|
10%
|
|
Higher Rate - Income Over
|
**£34,800
|
£34,600
|
|
Tax Rate Excluding Dividends
|
40%
|
40%
|
|
Dividend Upper Rate
|
32.5%
|
32.5%
|
* 10% starting rate only available for savings income up to £2,320.
Not applicable if taxable non-savings income exceeds £2,320.
Allowances which Reduce Taxable Incomes
|
|
|
2008/09
|
2007/08
|
| Personal Allowances (PA)
|
- under 65
|
**£6,035
|
£5,225
|
|
|
- 65 to 74
|
£9,030
|
£7,550
|
|
|
- 75 and over
|
£9,180
|
£7,690
|
Allowances which Reduce Tax
| Married couple's allowance (MCA)
|
|
2008/09
|
2007/08
|
| Tax Reduction
|
- 74
|
£653.50
|
£628.50
|
|
|
- 75 and over
|
£662.50
|
£636.50
|
Ages are at the end of the tax year.
|
|
2008/09
|
2007/08
|
| The age-related allowances are progressively withdrawn if income exceeds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
|
|
2008/09
|
2007/08
|
| Enterprise Investment Scheme up to
|
°£500,000
|
£400,000
|
| Venture Capital Trust up to
|
£200,000
|
£200,000
|
| 'Rent a Room' exempt on gross annual rent
|
£4,250
|
£4,250
|
| Construction Industry Scheme deduction rate
|
20/30%
|
20/30%
|
** Based on 13 May 2008 revisions to original Budget announcements and subject to final confirmation.
° Start date subject to European Commission approval.
Income Shifting
Following the protracted case of husband-and-wife business Arctic Systems, which finally ended in defeat for HMRC last year, the Government has proposed legislation intended to undo the tax advantage gained by income shifting arrangements.
The Government has considered the responses received to the recent consultation and believes that a further period of consultation will ensure that legislation in this area provides clarity and certainty for businesses and their advisers. The Government now intends to introduce legislation through the 2009 Finance Bill will not enact legislation effective from 6 April 2008.
