|
Rates & Allowances - 2007 / 2008
Income Tax
|
Tax rates |
Note |
2007/08 |
2006/07 |
|
Starting
rate band to |
£2,230 |
£2,150 |
|
Tax rate |
10% |
10% |
|
Basic rate
band - next |
£32,370 |
£31,150 |
|
Non-savings rate |
22% |
22% |
|
Savings rate |
20% |
20% |
|
Dividend ordinary rate |
10% |
10% |
|
Higher rate
- taxable income over |
£34,600 |
£33,300 |
|
Higher tax rate |
40% |
40% |
|
Dividend upper rate |
32.5% |
32.5% |
|
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 |
22% |
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 |
£5,225 |
£5,035 |
|
|
65 to 74 |
1,3 |
£7,550 |
£7,280 |
|
|
75 and over |
1,3 |
£7,690 |
£7,420 |
|
|
Blind person's allowance |
|
£1,730 |
£1,660 |
|
Allowances
that reduce tax |
|
|
|
Married couple's allowance (MCA) |
|
|
|
|
Tax reduction |
73 to 74 |
1,2,3 |
£628.50 |
£606.50 |
|
|
75 and over |
1,2,3 |
£636.50 |
£613.50 |
|
The age-related allowances are progressively withdrawn if income exceeds |
£20,900 |
£20,100 |
|
Minimum PA |
£5,225 |
£5,035 |
|
Minimum MCA tax reduction |
£244 |
£235 |
|
Tax Shelters |
|
|
|
Enterprise Investment Scheme (EIS) up to |
£400,000 |
£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% |
18% |
|
Higher (not registered) |
30% |
18% |
|
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 £20,900 (2006/07 £20,100)
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 £244 (2006/07 £235) 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.
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