Income Tax Rates

Tax Data 2008 / 2009

INCOME TAX RATES

Income Tax - taxable bands	2008/09 (£)	2007/08 (£)
Starting rate: 10%:	-	£0 - £2,230
Basic rate: 20%:	£0 - £34,800	-
Basic rate: 22%	-	£2,230 - £34,600
Higher rate: 40%	£34,800 +	£34,600 +

*from 2008/09 only applicable on savings income where it is below £2,320.

Dividends
Basic rate taxpayers	10%	10%
Higher rate taxpayers	32.5%	32.5%

Pre-owned assets tax (£5,000 taxable threshold)	As income	As income

Discretionary and Relevant Property Trusts*
Basic rate band	1,000	1,000
Dividends (rate applicable to trusts - RAT)	32.5%	32.5%
Other income (rate applicable to trusts - RAT)	40%	40%

*from 6/4/2008 A&M trusts can only be created by a parent's will, all other trusts will fall under the RPT regime.

Interest In Possession Trusts
Dividends	10%	10%
Savings	20%	20%
Other income	20%	22%

INCOME TAX RELIEFS

		2008/09 (£)	2007/08 (£)
Given at marginal rate of income tax
	Personal allowance (minimum)	6,035	5,225
	Personal allowance (age 65-74)	9,030	7,550
	Personal allowance (age 75+)	9,180	7,690

Relief restricted to 10%
	Married couples/Civil partnerships allowance (age under 75 and born before 6th April 1935)	6,535	6,285
	Married couples/Civil partnerships allowance (age 75+)	6,625	6,365
	Married couples/Civil partnerships allowance (minimum)	2,540	2,440
Age related relief's abated by £1 for every £2 of income over		21,800	20,900

Blind Person's Allowance		1,800	1,730

Rent-a-room tax free home income*		4,250	4,250
*restricted to £2,150 if letting jointly.



Child Tax Credit (CTC)
Family element	545	545
Family element baby addition	545	545
Child element	2,085	1,845
Disabled child element	2,540	2,440
Severely disabled child element	1,020	980

Working Tax Credit (WTC)
Basic element	1,800	1,730
Couples & lone parent element	1,770	1,700
30 hour element	735	705
Disabled worker element	2,405	2,310
Severe disability element	1,020	980
50+ return to work payment (16-29 hours)	1,235	1,185
50+ return to work payment (30+ hours)	1,840	1,770

Childcare Element of WTC
Maximum eligible cost for one child	£175 per week	£175 per week
Maximum eligible cost for two or more children	£300 per week	£300 per week
Percentage of eligible costs covered	80%	80%

Withdrawal Rates for CTC & WTC
First income threshold	6,420	5,220
First income threshold for CTC only	15,575	14,495
First withdrawal rate	39%	37%
Second income threshold	50,000	50,000
Second withdrawal rate	6.67%	6.67%
Income increase disregarded	25,000	25,000

Limits for other relief's
Enterprise Investment Scheme (EIS) at 20%
Maximum Investment	500,000	400,000
EIS capital gains re-investment	Unlimited	Unlimited
Venture Capital Trusts (VCT) @ 30%
Maximum Investment	200,000	200,000

For information of users: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.

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