at a glanceadministration of taxpersonal taxationemployment taxationbusiness taxcorporation taxcapital gains taxsavings and investmentinheritance taxcharitiestrustsstamp taxesvalue added tax

Note: It must be remembered that these proposals are subject to amendment during the passage of the Finance Bill.

PERSONAL TAXATION 2008/09 2007/08
Personal allowance    
general £5,435 £5,225
aged 65 or over in year
of assessment
£9,030 £7,550
aged 75 or over in year
of assessment
£9,180 £7,690
age allowance income limit £21,800 £20,900
minimum where income
exceeds limit
£5,435 £5,225
Married couple’s allowance
(10% relief)
   
either partner born before
6 April 1935
£6,535 £6,285
either partner aged 75 or
over in year of assessment
£6,625 £6,365
age allowance income limit £21,800 £20,900
minimum where income
exceeds limit
£2,540 £2,440
Blind person’s allowance £1,800 £1,730
Income tax rates    
Starting rate 10% 10%
on income up to £2,320* £2,230
Basic rate 20% 22%
on taxable income up to £36,000 £34,600
Higher rate 40% 40%
on taxable income over £36,000 £34,600
Lower rate    
on certain savings income 20%
Lower rate on dividend income 10% 10%
Higher rate on dividend income 32.5% 32.5%
*Starting rate applies only to savings income for 2008/ 09. If taxable non-savings income is above this limit, the starting rate is not applicable.
 
COMPANY TAXATION FY2008 FY2007
Corporation tax rates    
All companies (except below) 28% 30%
Companies with small profits 21% 20%
— 21%/20% rate limit £300,000 £300,000
— marginal relief limit £1,500,000 £1,500,000
— marginal relief fraction 7/400 1/40
— marginal rate 29.75% 32.5%
For certain profits from oil activities, the full rate and small profits rate are 30% and 19% respectively for both years, the marginal relief fraction is 11/400 and the marginal rate is 32.75%.
     
CAPITAL GAINS TAX 2008/09 2007/08
Rate— general 18%* 10%*:20%* :40%*
— trustees and personal representatives 18%* 40%*
General exemption limit £9,600 £9,200
*subject to available reliefs    
     
INHERITANCE TAX
Transfers after 5/4/2008
Threshold   £312,000
(previously £300,000 for transfers after 5 April 2007)
Death rate   40%
     
VAT    
Standard rate   17.5%
Registration threshold after 31 March 2008 £67,000
(previously £64,000 after 31 March 2007)
     
NATIONAL INSURANCE   2008/09
(2007/08 in brackets where different)
Class 1 contributions    
Not contracted out    
The employee contribution is 11% of earnings between £105 (£100) and £770 (£670) p.w. plus 1% of all earnings above £770 (£670) p.w. The employer contribution is 12.8% of all earnings in excess of the first £105 (£100) p.w.
Contracted out    
The ‘not contracted out’ rates for employees are reduced on the band of earnings from £105 (£100) p.w. to £770 (£670) p.w. by 1.6%. For employers, they are reduced on the band of earnings from £105 (£100) p.w. to £770 (£670) p.w. by 3.7% for employees in salary-related schemes or 1.4% for employees in money purchase schemes. In addition, there is an employee rebate of 1.6% and an employer rebate of 3.7% or 1.4%, as appropriate, on earnings from £90 (£87) p.w. up to £105 (£100) p.w.
 
Class 1A and 1B contributions 12.8%
 
Class 2 contributions    
Flat weekly rate £2.30 (£2.20)
Exemption limit £4,825 (£4,635)
 
Class 3 contributions    
Flat weekly rate £8.10 (£7.80)
 
Class 4 contributions    
8% on the band of profits between £5,435 (£5,225) and £40,040 (£34,840) plus 1% on all profits above £40,040 (£34,840).