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Tax Data 2009
Introduction
Our Tax Rates Centre provides a summary of some of the essential tax rates, dates and figures for 2008/09.
2008/09 Tax Rates Centre is for guidance only and professional advice should be obtained before acting on any information contained as no responsibility can be accepted for loss occasioned as a result of action taken or refrained from in consequence of its contents. |
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| Income Tax |
Figures marked with a ** are based on recent revisions to the original announcements made in the 2008 Budget.
Tax rates |
Note |
2008/09 |
2007/08 |
Starting rate band |
* see below |
£2,230 |
Tax rate |
N/A |
10% |
Basic rate band |
**£34,800 |
£32,370 |
Basic rate |
20% |
22% |
Savings rate |
* see below |
20% |
Dividend ordinary rate |
10% |
10% |
Higher rate - taxable income over |
**£34,800 |
£34,600 |
Higher tax rate |
40% |
40% |
Dividend upper rate |
32.5% |
32.5% |
* 10% starting rate for savings income up to £2,320. Not applicable if taxable non-savings income exceeds £2,320. |
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Trusts |
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For interest in possession trusts on all income, and other trusts on the first £1,000 of income ("standard rate band"): |
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dividend ordinary rate |
4 |
10% |
10% |
savings income |
4 |
20% |
20% |
other income |
4 |
20% |
22% |
Income of other trusts above £1,000 is taxed at the special trust rates: |
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rate applicable to trusts |
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40% |
40% |
dividend trust rate |
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32.5% |
32.5% |
Allowances that reduce taxable income |
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Personal allowance (PA) |
under 65 |
1 |
**£6,035 |
£5,225 |
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65 to 74 |
1,3 |
£9,030 |
£7,550 |
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75 and over |
1,3 |
£9,180 |
£7,690 |
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Blind person's allowance |
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£1,800 |
£1,730 |
Allowances that reduce tax |
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Married couple's allowance (MCA) |
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Tax reduction |
74 |
1,2,3 |
£653.50 |
£628.50 |
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75 and over |
1,2,3 |
£662.50 |
£636.50 |
The age-related allowances are progressively withdrawn if income exceeds |
£21,800 |
£20,900 |
Minimum PA |
**£6,035 |
£5,225 |
Minimum MCA tax reduction |
£254 |
£244 |
Tax Shelters |
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Enterprise Investment Scheme (EIS) up to |
5 |
£500,000 |
£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 |
Construction Industry Scheme deduction rate: |
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Standard (registered) |
20% |
20% |
Higher (not registered) |
30% |
30% |
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Notes
- 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 £21,800 (2007/08 £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 £254 (2007/08 £244) 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).
- Where there are several trusts created by the same settlor, the "standard rate band" is divided equally between them, subject to a minimum band of £200 for each trust.
- Start date for 2008/09 increase is subject to European Commission approval.
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| Capital Gains Tax |
Capital gains tax rates and bands are as follows: |
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2008/09 |
2007/08 |
On chargeable gains |
18% |
Taxed as top slice of savings income |
Annual exemption |
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- individual |
£9,600 |
£9,200 |
- settlement(s) (spread over total number) |
£4,800 |
£4,600 |
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Chattels exemption |
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(proceeds per item or set) |
£6,000 |
£6,000 |
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Entrepreneurs' Relief
This relief will reduce the chargeable gain on qualifying assets by 4/9, resulting in an effective rate of 10%. An individual will be able to make claims for disposals on or after 6 April 2008. Claims may be made on more than one occasion, up to a “lifetime” total of £1 million of gains.
Notes
- Transfers between husband and wife or civil partners living together are generally exempt.
- Capital gains of all trusts for 2008/09 are taxed at the standard rate of 18% (2007/08 special rate for trusts 40%). Where there are several trusts created by the same settlor, the annual exemption is divided equally between them, subject to a minimum exemption of £960 (2007/08 £920) for each trust.
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| Vehicle Benefits |
Chargeable on employees earning £8,500 or over (including benefits), and directors.
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 (CO2),
- the fuel type (for most types of car, this is all the information you need to work out the taxable benefit)
- your highest rate of income tax.
You can find your taxable percentage for 2008/09 using the following table:
CO2 in g/km |
Taxable % |
CO2 in g/km |
Taxable % |
CO2 in g/km |
Taxable % |
Petrol |
Diesel |
Petrol |
Diesel |
Petrol |
Diesel |
120 and below |
10% |
13% |
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121 to 139 |
15% |
18% |
170 to 174 |
22% |
25% |
205 to 209 |
29% |
32% |
140 to 144 |
16% |
19% |
175 to 179 |
23% |
26% |
210 to 214 |
30% |
33% |
145 to 149 |
17% |
20% |
180 to 184 |
24% |
27% |
215 to 219 |
31% |
34% |
150 to 154 |
18% |
21% |
185 to 189 |
25% |
28% |
220 to 224 |
32% |
35% |
155 to 159 |
19% |
22% |
190 to 194 |
26% |
29% |
225 to 229 |
33% |
35% |
160 to 164 |
20% |
23% |
195 to 199 |
27% |
30% |
230 to 234 |
34% |
35% |
165 to 169 |
21% |
24% |
200 to 204 |
28% |
31% |
235 and over |
35% |
35% |
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How to find out how much CO2 your company car emits – see:
- the car’s V5 registration document
- your dealer
- the data pages of car magazines (current models)
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Reliable emissions data is not widely available for cars registered before 1 January 1998. For them, the following taxable percentages apply, regardless of fuel type:
Engine capacity |
Taxable % |
Up to 1400cc |
15% |
1401 - 2000cc |
22% |
Over 2000cc |
32% |
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Car Fuel Benefits |
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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 2008/09, is calculated by multiplying £16,900 by the same percentage as applies (or would apply) 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 177 g/km of CO2.
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 re-imbursed for the cost, the 2008/09 tax bill for the fuel is: £16,900 x 23% x 40% = £1,554.80.
Company Vans
The taxable benefit for the unrestricted use of company vans is £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.
Van and fuel charge |
Van |
Fuel |
Total |
Tax (20% taxpayer) |
£600 |
£100 |
£700 |
Tax (40% taxpayer) |
£1,200 |
£200 |
£1,400 |
Employer's class 1A NICs |
£384 |
£64 |
£448 |
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Van drivers can avoid a benefit charge if they agree not to use the van for personal journeys. Driving to and from work is acceptable so long as there is a reasonable amount of business use. |
| Mileage Allowances |
For Employees Using Their Own Transport |
The approved maximum tax and national insurance free mileage allowances for employees using their own transport for business are as follows: |
Flat Rate |
First 10,000 Miles |
Miles over 10,000 |
Car / Van |
40p |
25p |
Motorcycle |
24p |
24p |
Bicycle |
20p |
20p |
Income Tax and NICs are due when allowances exceed these rates. Employees can claim tax relief on any shortfall.
Rates of up to 5p per mile, per passenger, are also tax and NIC free when paid for the carriage of fellow employees on the same business trip. |
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Fuel-Only Mileage Rates* |
HMRC advisory mileage rates as at 1 July 2008 for employee private mileage reimbursement or employer reimbursement of business mileage are: |
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Petrol |
Diesel |
LPG |
Up to 1400cc |
12p |
13p |
7p |
1401cc - 2000cc |
15p |
13p |
9p |
Over 2000cc |
21p |
17p |
13p |
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* Due to the unusual circumstances surrounding fuel price increases, HMRC is
content for the new rates to implemented from 1 June 2008. |
| National Insurance Contributions |
Class 1 (not contracted out) |
Employer |
Employee |
Lower earnings limit |
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£90 |
Payable on weekly earnings |
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£105.01 - £770 |
12.8% |
11% |
Over £770 |
12.8% |
1% |
Over state retirement age |
12.8% |
Nil |
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Class 1A (on relevant benefits) |
12.8% |
Nil |
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Class 1B (on PAYE settlement arrangement) |
12.8% |
Nil |
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Class 2 (Self employed) |
£2.30 per week |
Limit of net earnings for exception |
£4,825 per annum |
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Class 3 (Voluntary) |
£8.10 per week |
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Class 4 (* Self employed on profits) |
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£5,435 to £40,040 |
8% |
Excess over £40,040 |
1% |
*Exemption applies if state retirement age was reached by 6 April 2008. |
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Note
For those earning between £90 per week and £770 per week, employers receive a rebate of 1.4% on contracted out money purchase schemes or 3.7% on contracted out final salary schemes, and employees, a rebate of 1.6% for either scheme.
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