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progressively withdrawn if income exceeds |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.
|
