| 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 |
|
|
| Income within starting rate band |
10% |
10% |
| Income within basic rate band |
20% |
20% |
| Tax on UK dividends within starting and basic rate bands |
10% |
10% |
| Higher rate - taxable income over |
£34,600 |
£33,300 |
| Higher tax rate |
40% |
40% |
| UK dividend rate |
32.5% |
32.5% |
| Trusts |
|
|
| Trust rate |
40% |
40% |
| Schedule F 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| The age-related allowances are progressively withdrawn if income exceeds |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 |
| Maximum amount for EIS carry back |
£50,000 |
£25,000 |
| 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 |
- 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 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 £44 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).
That the Government expect to raise £157 billion of its £553 billion tax generating programme from income tax. In the last tax year this tax raised almost £147 billion. Thus the Government seeks to increase its income from receipts taxes by almost 7%.
April 2008 and Beyond
From 6 April 2008, the 10 pence starting rate will be removed for earned income but will continue for savings income and capital gains. While from 6 April 2008, the basic rate of income tax will be reduced from 22% to 20%.
From 6 April 2008, the additional age-related income tax allowances for those aged 65 and over will rise by £1,180 above indexation. By April 2011, the age-related allowance for those aged 75 and over will increase to £10,000.
|
2007/08 Rates and Allowances
|