Tax rates & related information 2008-9

Please note that the details on this page reflect the contents of the 2008 Budget and its associated paperwork. Some points may therefore have been superseded by subsequent events.

his pocket size card provides full details of the 2008-2009 tax rates.

Request a copy or click on the following link to download the 2008-2009 tax rates & related information.

We have also provided an on-screen version of the tax rates 2008-2009 below:

Income Tax Rates

	Taxable income 2007/08	Taxable income 2008/09	From September
Rate %	£	£	£
10^†	Up to 2,230
20		Up to 36,000	34,800
22	2,231 - 34,600
40	Over 34,600	Over 36,000	34,800

Dividends may be taxed at 10% and 32.5%. Rate of income tax for discretionary trusts and accumulation and maintenance trusts: 32.5% for dividend income, 40% for non-dividend income.

† Starting rate to be removed in 2008/09 for earned income and pension income, but will remain for savings income to a level of £2,320.

Income Tax Allowances

	2007/08	2008/09	From September
Allowance	£	£	£
Personal	5,225	5,435	6,035
Age allowance age 65 - 74
Personal	7,550	9,030
Married couple's (1)(2)	6,285	6,535
Age allowance 75 and over
Personal	7,690	9,180
Married couple's (1)	6,365	6,625
Income limit	20,900	21,800
Married couple's allowance minimum amount (1)	2,440	2,540
Blind person's allowance	1,730	1,800
‘Rent-a-room'	4,250	4,250

(1) Relief is restricted to a 10% tax credit.

(2) If born before 6 April 1935.

Working Tax Credit (WTC) and Child Tax Credit (CTC)

	2007/08	2008/09
	£	£
Working Tax Credit (1)
Adult element	(a) 1,730	1,800
Addition for couple/one parent	(a) 1,700	1,770
Working 30 hours or more	(a) 705	735
Disability addition	2,310	2,405
Enhanced disability addition	980	1,020
Childcare element
- maximum eligible cost 1 child	(b) 175	175
- maximum eligible cost 2 or more children	(b) 300	300
Return to work (aged 50+)
- less than 30 hours	1,185	1,235
- more than 30 hours	1,770	1,840

Child Tax Credit (2)
Family element	(d) 545	545
- baby addition	(d) 545	545
Child element - per child	(c) 1,845	2,085
Disabled child addition	2,440	2,540
Enhanced disability addition	980	1,020

Reduction where joint income of the family unit exceeds:
Up to £6,420	No reduction
£6,421 to £50,000	Withdrawn at 39% of excess applied to (a) then (b) then (c)
Over £50,000	Withdrawn at 1 in 15 of excess applied only to (d)

(1) Aged over 16 working 16 or more hours per week if responsible for a child, or disabled, or aged over 25 working 30 hours per week.

(2) One or more children under 16 or in defined further education.
Paid direct to main carer.

* Limited to 80%

Tax-Privileged Pension Savings Under Pension Simplification 2008/09

Single lifetime allowance	£1,650,000
Contributions: Tax relief given up to higher of:	- 3,600; or - 100% of relevant earnings (capped at £235,000)
Maximum tax free lump sum	25% of the fund
(up to a maximum of 25% of the lifetime allowance)

On withdrawal, excess funds over lifetime allowance taxed at:

25% when used to buy a pension (which is then subject to individual's highest marginal rate)
55% when taken as lump sum

Value Added Tax

Standard rate	17.5%
VAT fraction (where included in cost)	7/47

	To 31 March 2008	From 1 April 2008
Registration threshold	£64,000	£67,000

Optional flat-rate scheme for small businesses is available.

National Insurance Contributions

Employees' Class 1 contributions 2008/09
Total weekly earnings	Not contracted out	Contracted Out
Below £105*	NIL	NIL
£105 - £770	NIL on first £105 plus 11% on band between £105 and £770	NIL on first £105 plus 9.4% on band between £105 and £770
Over £770	As above plus 1% on earnings over £770	As above plus 1% on earnings over £770

Married women's reduced rate

4.85% on earnings between £105 and £770 per week plus 1% on earnings above £770 per week

* Between £90 pw and £105 pw a zero rate applies to protect employees' contributory benefit entitlement.

Employers' Class 1 contributions 2008/09
Total weekly earnings	Not contracted out	Contracted out Salary-related schemes	Contracted out Money purchase schemes
Below £105	NIL	NIL	NIL
£105 - £770	Nil on first £105 plus 12.8%on balance over £105	Nil on first £105 plus 9.1%on balance over £105	Nil on first £105 plus 11.4%on balance over £105
Over £770	Nil on first £105 plus 12.8%on balance over £105	Nil on first £105 plus 9.1% on next £665 plus 12.8% on balance over £770	Nil on first £105 plus 11.4% on next £665 plus 12.8%on balance over £770

Class 2 - Self employed	Flat rate £2.30 per week if earnings exceed £4,825 per annum
Class 3 - Voluntary	Flat rate £8.10 per week
Class 4 - Self employed	8% of profits between £5,435 and £40,040 per annum plus 1% on earnings over £40,040

Corporation Tax (CT)

Financial year to	31 March 2008	31 March 2009
Tax rate	30%	28%
Small companies rate	20%	21%
Where profits less than	£300,000	£300,000
Marginal relief up to	£1,500,000	£1,500,000
Marginal relief fraction	1/40	7/400
Effective marginal rate	32.5%	29.75%

Capital Allowances (regime change )

		2007/08	2008/09
Plant and machinery
- 1st year allowance for small-sized businesses	*	50%	100%
- 1st year allowance for medium-sized businesses	*	40%	100%
- annual allowance	†	25%	20%
- long life assets	†	6%	10%
Integral fixtures	†	N/A	10%
Limit on allowances for expensive cars		£12,000	£12,000
Cars under limit - annual allowance	†	25%	20%
Cars over limit - maximum allowance per annum		£3,000	£3,000
Industrial buildings - annual allowance		4% cost	3% cost
Agricultural buildings and works - annual allowance		4% cost	3% cost
Expenditure on renovation or conversion of space above shops, etc, and designated energy saving plant and machinery	#	100%	100%

*100% Annual Investment Allowance for up to £50,000 incurred on plant and machinery for each unlinked unincorporated business or corporate groups. Expenditure over £50,000 dealt with through standard regime.

† Reducing balance.

# Special anti-avoidance measures apply.

Car and Fuel Benefits 2008/09

Cars

Minimum	15% of list price (emissions level 135g/km CO₂ (2007/08: 140g/km CO₂))
Increments	1% for each additional 5g/km CO₂ emissions over 135g/km CO₂(2007/08: 140g/km CO₂)
Diesel cars	3% surcharge unless car meets ‘Euro IV' standard*
Maximum	35% of list price

Emissions levels for most cars can be found on www.vca.gov.uk

CO₂ level rounded down to nearest 5g.

* Waiver ceases for cars registered on or after 1 January 2006.

If no emissions rating

	Registered before 1.1.98	Registered after 1.1.98
1400cc or less	15%	15%
1401 - 2000cc	22%	25%
2001cc - or more	32%	35%

Fuel

Private fuel provided with company car

- percentages as above for cars x
maximum £16,900.

Approved mileage rates for business mileage in own car

Cars and vans	Per mile
0 - 10,000 miles	40p
Over 10,000 miles	25p

Advisory mileage rates for business mileage in company car

From 1 January 2008
	Petrol	Diesel	LPG
1400cc or less	11p	11p	7p
1401 - 2000cc	13p	11p	8p
2001cc or more	19p	14p	11p

Capital Gains Tax (regime change)

		2007/08	2008/09
Tax rates	Individuals	10, 20 or 40%	18%*
(depending on level of taxable income)
	Trusts^† and personal representatives	40%	18%
	Companies	40%	18%
		see CT rates	see CT rates
Annual exemptions
	Individuals	£9,200	£9,600
	Trusts (maximum)	£4,600	£4,800
	Chattels proceeds exemption	£6,000	£6,000
	Capital Gains Tax Entrepreneurs' Relief^#	-	£1 million

* Taper relief and indexation relief abolished from 6 April 2008.

† If settlor retains interest or may benefit, tax at settlor's rate instead.
Special rules may apply for offshore trusts.

# The first £1 million of gains arising in connection with disposals of whole or part of a business, reduced by 4/9ths, giving a tax rate of 10%.

Capital Gains Tax Taper Relief (until 2007/08 only)

Disposal of business assets prior to 6 April 2008 could benefit from relief of up to 75% of the gain.

Disposal of non-business assets prior to 6 April 2008 could benefit from relief of up to 40% of the gain.

Capital Gains Tax Entrepreneurs' Relief (2008/09 onwards)

Disposal of whole or part of a business after 6 April 2008 could benefit from an effective CGT tax rate of 10%. This applies to the first £1 million of gains.

Inheritance Tax

Transfers on or after 6 April 2008 (husband and wife treated separately)

Band £	Lifetime rate	Death rate
0 - 312,000	NIL	NIL
Over 312,000	20%	40%

Transferable nil-rate band*	£312,000
Annual exemption	£3,000
Small gifts exemption	£250
Wedding gifts exemption
Gifts made by - parent - remoter ancestor - party to marriage - other person	£5,000 £2,500 £2,500 £1,000

* Unused nil-rate band can be transferred to surviving spouse or civil partner. Available where surviving spouse or civil partner died on or after 9 October 2007.

Inheritance Tax Tapering Relief

Rates for transfers on death also apply to gifts within seven years of death subject to tapering relief.

Years between gift and death	Reduction in charge
0 - 3	NIL
3 - 4	20%
4 - 5	40%
5 - 6	60%
6 - 7	80%

Stamp Duty

Stamp Duty was abolished from 1 December 2003 on all transactions except for the following.

Transfer of shares & securities (rate unchanged at 0.5%).

Certain transactions involving partnership land.

Stamp Duty Land Tax

Stamp Duty Land Tax was introduced to replace Stamp Duty on UK property transactions from 1 December 2003.

Percentages applying on the acquisition of property in the UK
Residential Consideration £	%	Non-residential Consideration £	%
0 - 125,000	NIL	0 - 150,000	NIL
125,001 - 250,000	1%	150,001 - 250,000	1%
250,001 - 500,000	3%	250,001 - 500,000	3%
500,001 plus	4%	500,001 plus	4%

Percentage applying on the rental stream arising from the grant of a new lease in the UK
Residential Relevant rental value £	%	Non-residential Relevant rental value £	%
0 - 125,000	NIL	0 - 150,000	NIL
125,001 plus	*1%	150,001 plus	*1%

Special rates apply to property transactions in disadvantaged areas and new zero carbon homes.

* The tax rate only applies to the relevant rental value which exceeds
the nil-rate band.

Budget 2008