Budget 2008
Introduction
Personal Taxation
Employee Taxation
Investment Reliefs
Capital Gains Tax
Trusts
Tax Credits
National Insurance Contributions
Inheritance Tax
Business Tax
Corporation Tax
Value Added Tax
Stamp Duty
Insurance Premium Tax
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Personal Taxation
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| Starting rate on first |
* |
£2,230 |
| Basic rate on next |
36,000 |
32,370 |
| Higher rate on taxable income over |
36,000 |
34,600 |
| * For 2008/09, starting rate will not apply to general income and will only apply to savings income if general income less allowances is less than £2,320. This band lies within the basic rate band of £36,000, so the next £33,680 of savings income is charged at the basic rate. |
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| Starting |
N/A (10%) |
10% |
10% |
| Basic |
20% (22%) |
20% |
10% |
| Higher |
40% |
40% |
32.5% |
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| (2007/08 rates in brackets where different) |
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Taxable income uses up the rate bands in the following order:
* 'general income' (employment, business profits, rent)
* 'savings income' (mainly interest)
* 'dividends' (mainly distributions from companies)
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| A taxpayer who pays personal (including stakeholder) pension policy premiums, or gives cash to charity, increases the basic rate band by the grossed up equivalent of the payment. This means that more tax is paid at the basic rate and less is paid at the top rate. |
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2008/09 personal tax return: due to be filed by 31 January 2010 (online) or 31 October 2009 (paper).
* penalty for late return: £100 (or the tax due, if less)
2008/09 tax payable:
* tax on employment income paid under PAYE each month
* basic rate liability on savings and dividends usually settled by receiving the income net of tax paid or credited
* balance of tax due under self assessment (SA):
- payments on account due 31 January 2009 and 31 July 2009, based on the 2007/08 SA income tax and Class 4 NIC
- balance, plus any CGT, due 31 January 2010, with the first payment on account for 2009/10
Missing any payment dates leads to interest; missing the balancing payment date by 28 days will lead to a 5% surcharge and a further 5% surcharge if not paid by following 31 July. |
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| Personal income tax allowance |
£5,435 |
£5,225 |
| CGT annual exemption |
9,600 |
9,200 |
| Blind person's allowance |
1,800 |
1,730 |
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| Personal allowance (PA) |
| * Age 65 - 74 in the tax year |
£9,030 |
£7,550 |
| * Age 75 and over in the tax year |
9,180 |
7,690 |
| * Minimum* |
6,535 |
6,285 |
| Married couple' allowance (MCA)** (also for civil partners) |
| * Age up to 74 |
6,535 |
6,285 |
| * Age 75 and over |
6,625 |
6,365 |
| * Minimum* |
2,540 |
2,440 |
| Income Limit* |
21,800 |
20,900 |
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* If the taxpayer's total income exceeds the income limit (extended for gift aid and pension contributions), one-half of that excess is deducted from the allowances - first from the PA until the minimum is reached, then from the MCA until the minimum is reached.
** Amount depends on age of older spouse; allowed at 10%; nil if born after 5 April 1935; reduced if marriage took place during the tax year. |
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Rent-a-room exemption for letting out part of the taxpayer's only or main residence: gross income of £4,250pa.
Gift aid: on a cash gift to charity, the charity can reclaim 22/78 (28.2%) of the donation from the Revenue if the donor makes a declaration. The donor increases the basic rate band by the gross gift (100/80). The market value of gifts of land or quoted shares can be deducted from taxable income for full tax relief, and the charity pays no tax on the gift received. Also "Give as you earn" scheme allows charitable gifts to be made from pre-tax pay, so PAYE is reduced. |
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