Personal and Company Tax allowances

INCOME TAX

Tax Rates	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	20%	20%
UK dividend rate	10%	10%
Higher rate – taxable income over	£34,600	£33,300
Higher tax rate	40%	40%
UK dividend rate	32.5%	32.5%
Trusts
Tax rate	40%	40%
UK dividend rate	32.5%	32.5%
Allowances that reduce taxable income
Personal allowance (PA) Under 65 – See Note 1	£5,225	£5,035
65 – 74 – See Notes 1 and 3	£7,550	£7,280
75 and over – See Notes 1 and 3	£7,690	£7,420
Blind person’s allowance	£1,730	£1,660
Allowances that reduce tax
Married couple’s allowance (MCA)
Tax reduction 71 to 74 – See Notes 1, 2 and 3	£628.50	£606.50
75 and over – See Notes 1, 2 and 3	£636.50	£613.50
The age-related allowances are progressively withdrawn if income exceeds	£20,100	£20,100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
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

Ages are as the end of the tax year. Ages for the MCA relate to the elder of husband or wife.

MCA is available only to those couples where at least one spouse was born before 6 April 1935

The higher rates of personal allowances are reduced by £1 for each £2 in excess income over £19,500 (2004/2005 £18,900) 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 in excess income (only the husband’s income is taken into account) until the minimum of £228 (2004/2005 £221) is reached.

PENSION PREMIUMS

2007/2008

Lifetime Allowance*

£1,600,000

Lifetime Allowance Charge

55% if excess is drawn as cash

25% if excess is drawn as income

Maximum relievable contributions in the year

The lower of the annual allowance of £225,000 and 100% of relevant UK earnings or £3,600 if greater.

Maximum tax free cash*

25% of the pension benefit value

* Subject to transitional protection for excess amount

Notes

The contribution limits for personal pensions are calculated as a percentage of net relevant earnings with an earnings cap of £105,600.
The contribution limits for retirement annuities are calculated as a percentage of net relevant earnings with no earnings cap.
Where both types of policy are held, special rules apply.
Premiums on personal pension and stake holder pension policies are payable net of basic rate tax relief at source. Higher rate relief, where available, is obtained via a claim on the self assessment tax return.
Personal pension premium earnings caps for earlier years are:-

1989/1990	£60,000
1990/1991	£64,800
1991/1992	£71,400
1992/1993	£75,000
1993/1994	£75,000
1994/1995	£76,800
1995/1996	£78,600
1996/1997	£82,200
1997/1998	£84,000
1998/1999	£87,600
1999/2000	£90,600
2000/2001	£91,800
2001/2002	£95,400
2002/2003	£97,200
2003/2004	£99,000
2004/2005	£102,000
2005/2006	£105,600
2006/2007

Additional Voluntary Contributions for members of occupational pension schemes (Free standing AVC’s and AVC’s) allow members of occupational schemes to provide for greater financial security in retirement.
Total contributions to the occupational scheme and any free-standing scheme may be up to 15% of current-year remuneration, subject to the same cap on earnings as at (5) above.

These limits do not include the contributions by the DSS for employees contracted out of the State Earnings Related Pension Scheme (SERPS).

Special rules apply where both types of policy are held.

VEHICLE BENEFITS

Chargeable on employees earning £8,500 or more (including benefits) and Directors.

Car benefit

Van benefit
Car fuel benefit

The tax you pay on your company car is governed by four factors:

The list price of the car, on the day before it was first registered, plus certain accessories,
The rate at which the car emits carbon dioxide (CO 2),
The fuel type (for most types of car, this is all the information you need to work out the taxable benefit)
Your highest rates of income tax.

You can find your taxable percentage for 2005/2006 using the following table:

	Taxable %			Taxable %			Taxable %
CO 2 in g/km	Petrol	Diesel	CO 2 in g/km	Petrol	Diesel	CO 2 in g/km	Petrol	Diesel

Less than 145	15%	18%	175 to 179	22%	25%	210 to 214	29%	32%
145 to 149	16%	19%	180 to 184	23%	26%	215 to 219	30%	33%
150 to 154	17%	20%	185 to 189	24%	27%	220 to 224	31%	34%
155 to 159	18%	21%	190 to 194	25%	28%	225 to 229	32%	35%
160 to 164	19%	22%	195 to 199	26%	29%	230 to 234	33%	35%
165 to 169	20%	23%	200 to 204	27%	30%	235 to 239	34%	35%
170 to 174	21%	24%	205 to 209	28%	31%	240 and over	35%	35%

How to find out how much CO 2 your company car emits – see:

The car’s V5 registration document.
Your dealer.
The data pages of car magazines (current models).
The Vehicle Certification Agency – www.vca.gov.uk
The website of the Society of Motor Manufacturers and Traders – www.smmt.co.uk

Reliable emissions data is not widely available for cars registered before 1 st January 2998 . For them, the following taxable percentages apply, regardless of fuel type:

Engine Capacity	Taxable %
Up to 1400cc	15%
1401 – 2000cc	22%
Over 2000cc	32%
Electrically propelled	15%

Van Benefit

	Van under 4 years old	Van 4 years old, or over
Benefit per vehicle	£3000	£3000

Company Vans

From 6 th April 2005 there will be no taxable benefit where employee s h ave to take their company van s h ome and are not allowed any other private use. Otherwise, the taxable benefit for the private use of a company van and fuel, if supplied, is £3000 (van less or more than four years old) per annum, until 5 th April 2007 .

With effect from 6 th April 2007 , the taxable benefit for the unrestricted use of company vans will be £3,000 (with no reduction for older vans) plus a further £500 of taxable benefit if fuel is provided by the employer for private travel.

The maximum tax payable on the use of a company van will therefore increase from April 2007 from £200 to £1,400 per annum and the employer’s Class 1A NIC payable will increase from £64 to £448 per annum.

Car Fuel Benefits

If the employee pays for the full cost of all fuel for private journeys (usually including home to work) there will be no car fuel benefit. In all other cases the full tax charge will be due.

The taxable car fuel benefit for 2005/2006, is calculated by multiplying £14,400 by the same percentage as applies for the car benefit.

Example : A company car driver has a car which, on the day before it was first registered, had a list price of £18,000. It runs on petrol, and emits 182 g/km of CO 2.

If we assume the driver pays tax at 40%, the annual tax bill on the car is: £18,000 x 23% x 40% = £1,656.

If the employer provides any fuel used for private journeys and is not reimbursed for the cost, the 2005/2006 tax bill for the fuel is: £14,400 x 23% x 40% = £1,324.80.

NATIONAL INSURANCE CONTRIBUTIONS

Class 1 (not contracted out)	Employer	Employee
Lower earnings limit		£82
Payable on weekly earnings
£100.01 - £670	12.8%	11%
Over £670	12.8%	1%
Men 65 and over and women 60 and over	as above	Nil

Class 1A (on relevant benefits)

12.8%

Nil

Class 1B (on PAYE settlement arrangement)

12.8%

Nil

Class 2 (Self employed)	£2.20 per week
Limit of net earnings for exception	£4,635 per annum
Class 3 (Voluntary)	£7.80 per week
*Class 4 ( Self employed on profits)**
£5,225 to £34,840	8%
Excess over £34,840	1%
*Exemption applies if state retirement age was reached by 6 th April 2005 .

Note
For those earning between £82 per week and £630 per week, employers receive a rebate of 1.0% on contracted out money purchase schemes or 3.5% on contracted out final salary schemes, and employees, a rebate of 1.6% for either scheme.

CORPORATION TAX

Financial Year Commencing	1 st April 2007	1 st April 2006
Taxable Profits
First £300,000	20%	19%
Next £1,200,000	32.75%	32.75%
On profits over £1,500,000	30%	30%
Non-corporate distribution rate	N/A	19%

VALUE ADDED TAX

From	1 st April 2007	1 st April 2006
Standard rate	17.5%	17.5%
VAT fraction	7/47	7/47
Taxable Turnover Limits
Registration – last 12 months or next 30 days over	£64,000	£61,000
De-registration – next 12 months under	£62,000	£59,000
Cash accounting scheme – up to	£1,350,000	£660,000
Optional flat rate scheme – up to	£150,000	£150,000
Annual accounting scheme – up to	£1,350,000	£1,350,000

Quarterly Return – Scale figure for private use of fuel

From 1 May 2007
For prescribed accounting periods beginning after 30 April 2007 , the following table applies to assess output tax due on fuel used by cars for private journeys if it was provided at below cost from business resources.

Fuel scale charges for 12-month period

CO 2 band	VAT fuel scale charge,12 month period £	VAT on 12 month charge, £	VAT exclusive 12 month charge, £

140 or below	730.00	108.72	621.28
145	780.00	116.17	663.83
150	830.00	123.62	706.38
155	880.00	131.06	748.94
160	925.00	137.77	787.23
165	975.00	145.21	829.79
170	1025.00	152.66	872.34
175	1075.00	160.11	914.89
180	1120.00	166.81	953.19
185	1170.00	174.26	995.74
190	1220.00	181.70	1038.30
195	1270.00	189.15	1080.85
200	1315.00	195.85	1119.15
205	1365.00	203.30	1161.70
210	1415.00	210.74	1204.26
215	1465.00	218.19	1246.81
220	1510.00	224.89	1285.11
225	1560.00	232.34	1327.66
230	1610.00	239.79	1370.21
235	1660.00	247.23	1412.77
240 or above	1705.00	253.94	1451.06

Fuel scale charges for 3-month period

CO 2 band	VAT fuel scale charge,3 month period £	VAT on 3 month charge, £	VAT exclusive 3 month charge, £

140 or below	182.00	27.11	154.89
145	195.00	29.04	165.96
150	207.00	30.83	176.17
155	219.00	32.62	186.38
160	231.00	34.40	196.60
165	243.00	36.19	206.81
170	256.00	38.13	217.87
175	268.00	39.91	228.09
180	280.00	41.70	238.30
185	292.00	43.49	248.51
190	304.00	45.28	258.72
195	317.00	47.21	269.79
200	329.00	49.00	280.00
205	341.00	50.79	290.12
210	353.00	52.57	300.43
215	365.00	54.36	310.64
220	378.00	56.30	321.70
225	390.00	58.09	331.91
230	402.00	59.87	342.13
235	414.00	61.66	352.34
240 or above	426.00	63.45	362.55

Fuel scale charges for 1-month period

CO 2 band	VAT fuel scale charge,3 month period £	VAT on 3 month charge, £	VAT exclusive 3 month charge, £

140 or below	60.00	8.94	51.06
145	65.00	9.68	55.32
150	69.00	10.28	58.72
155	73.00	10.87	62.13
160	77.00	11.47	65.53
165	81.00	12.06	68.94
170	85.00	12.66	72.34
175	89.00	13.26	75.74
180	93.00	13.85	79.15
185	97.00	14.45	82.55
190	101.00	15.04	85.96
195	105.00	15.64	89.36
200	109.00	16.23	92.77
205	113.00	16.83	96.17
210	117.00	17.43	99.57
215	121.00	18.02	102.98
220	126.00	18.77	107.23
225	130.00	19.36	110.64
230	134.00	19.96	114.04
235	138.00	20.55	177.45
240 or above	142.00	21.15	120.85

CAPITAL GAINS TAX

Capital Gains Tax rates and bands are as follows:-

	2007/2008	2006/2007
Taxed as top slice of savings income
Annual Exemption
- Individual	£9,200	£8,800
- Settlement(s) (spread over total number)	£4,600	£4,400

Transfers between husband and wife living together are exempt.

Chattels exemption	2007/2008	2006/2007
(proceeds per item or set)	£6,000	£6,000

Taper Relief

For gains realised after 5 th April 1998 by individuals or trustees, indexation allowance is frozen and the gain reduced by a tapering relief. The value of the taper relief depends on whether or not the asset is a business asset, and on the number of complete years the asset has been held after 5 th April 1998 (with an additional “bonus” year for non-business asset s h eld on 16 th March 1998 ).

Non Business Assets

No. of complete years held after 5 th April 1998	% gain chargeable
1	100
2	100
3	95
4	90
5	85
6	80
7	75
8	70
9	65
10 or more	60

Business Assets

No. of complete years held after 5 th April 1998	Disposals after 5th April 2002 % of gain chargeable
0	100
1	50
2 or more	25

Notes

Transfers between husband and wife living together are exempt.
Capital gains are regarded as the top slice of savings income. Rates of 10%, 20% and 40% will therefore apply to gains taxed on individuals, as appropriate. Gains taxed on trustees are usually taxed at the special trust rate of 40%.

Tax Rates

Starting rate band to

Basic rate band – next

Higher rate – taxable income over

Allowances that reduce taxable income

Allowances that reduce tax

Tax Shelters

Car benefit

Taxable %

Taxable %

Taxable %

Engine Capacity

Taxable %

Van Benefit

Van under 4 years old

Van 4 years old, or over

Benefit per vehicle

Company Vans

Car Fuel Benefits

Employer

Employee

From

Taxable Turnover Limits

Registration – last 12 months or next 30 days over

De-registration – next 12 months under

Cash accounting scheme – up to

Optional flat rate scheme – up to

Annual accounting scheme – up to

Taxed as top slice of savings income

Annual Exemption

Chattels exemption

(proceeds per item or set)

Taper Relief

Notes