|
Budget 2008 - 09
|
| SUMMARY |
|
10% rate band disappears
Basic tax rate 20%
Capital allowances at 20% (rather than 25%) |
Capital gains change to 18% (no taper relief)
Corporation tax rate up to 21% |
| |
| ALLOWANCES |
| Personal allowance |
£5,435 (increase of £210) |
| Lower age (under 75) allowance |
£9,030 (increase of £1,480) |
| Upper age allowance |
£9,180 (increase of £1,490) |
| Allowances given at 10% (for elderly married
couples only) |
| Minimum married couple's allowance |
£2,540 |
| Lower / Upper married allowance |
£6,535 / £6,625 (age over 75) |
| |
|
| TAX RATE BANDS (increased with
inflation) |
| £0 - £2,230 |
Was 10% changing to 20% |
| £2,231 - £36,000 |
22% changing to 20% on 5 April 2008 |
| over £36,000 |
40% |
| From 6th April 2008 the 10% rate band will disappear
(on earned and pension income) and the basic rate will reduce
to 20%. Strangely, the 10% rate band will remain for savings
income. |
| |
| ISAs The amount you can invest
in a cash ISA increases by £600 to £3,600 in 2008/9. |
| |
| NATIONAL INSURANCE |
| In 2008/9 the upper limit for National Insurance
Contributions will increase to £40,400, so that the 11% (employee)
and 8% (self-employed) contributions will go up accordingly
for high earners.
Lower earnings limit for employees £90 per week; upper earnings
limit £770 per week.
Lower limit for self-employed profits £5,435; upper limit
£40,040 taxed at 8% (class 4 NIC) 1% thereafter.
Self-employed class 2 (usually direct debited) £2.30 per week.
|
| |
| CORPORATION TAX |
| The small company rate of Corporation Tax increases
from 1st April 2008 to 21% (up 1%) and to 22% in 2009. This
is penalizing the small limited companies that were previously
encouraged by the zero rate band.
It will still be advantageous to trade as a limited company
though, because the 21% rate in 2008/9 is lower than the income
tax 20% plus 8% NI rate for self-employed.
Company vans with any private use suffer a £3,000 scale charge.
Dividends are deemed to have suffered tax at 10% and are
taxable at that rate for basic rate taxpayers.
Higher rate taxpayers suffer an additional 22.5% tax on dividend
income.
No legislation on “income shifting” (just as well!).
|
| |
| CAPITAL ALLOWANCES |
| The first year allowance for capital expenditure
below £50,000 is 100%, but the writing down allowance will decrease
from 25% to 20%. Pools up to £1,000 may be written off. |
| |
| CAPITAL GAINS TAX Exempt limit
£9,600. Flat rate 18% thereafter. |
| |
| VALUE ADDED TAX Registration
threshold £67,000 sales p.a. |
| |
| VEHICLE TAX for high fuel consumption
vehicles will increase. Vehicle tax for economic (“green”)
vehicles will reduce. |
| |
|
| INHERITANCE TAX at 40% on estates
valued at over £312,000 at the date of death - increasing to
£350,000 by 2010/11. Widows/(ers) can use the (current) unused
exempt band from pre-deceased spouse (or partner). |
