Duddon & Co Accountants

 

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The age-related allowances are progressively withdrawn if income exceeds			£20,900	£20,100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

Notes

1. Ages are as the end of the tax year. Ages for the MCA relate to the elder of spouse or civil partner.
2. MCA is available only to those couples where at least one spouse or civil partner was born before 6 April 1935.
3. 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).

 

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