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Income Tax Rates
2008/20092007/2008
Band
£
Rate
%
Band
£
Rate
%
0 - 2,32010*0 - 2,23010
2,321 - 36,00020**2,231 - 34,60022**
Over 36,00040***Over 34,60040***

* Only applicable to dividends and savings income
** Except dividends (10%) and in 2007/2008, savings income (20%)
*** Except dividends (32.5%)
Other income taxed first, then savings income and finally dividends.

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Income Tax Reliefs
2008/09
£
2007/08
£
Personal allowance- under 655,4355,225
- 65 - 74 *9,0307,550
- 75 and over *9,1807,690
Married couple's allowance- aged less than 75 and born before 6.4.35 *6,5356,285
- 75 and over6,6256,365
- min. amount2,5402,440
* Age allowance income limit21,80020,900
(reduce age allowance by £1 for every £2 of excess income over age allowance income limit)
Blind person’s allowance1,8001,730

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Tax Credits
2008/09
£
2007/08
£
Working Tax Credit
Basic element - maximum1,8005,225
Childcare element  
80% of eligible costs up to £175 per week (£300 if two or more children).  
Child tax Credit (CTC)  
Child element per child - maximum2,0851,845
Family element545545
Baby addition545545
Reductions in maximum rates
39% (37%) of income above £6,420* (£5,220*) p.a.
* If only CTC is claimed the threshold is £15,575 (£14,495) p.a. The family element of CTC is not reduced unless income is more than £50,000 p.a. when it is reduced by £1 for every £15 of additional income.

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Pension Premiums
* tax relief available for personal contributions: higher of £3,600 (gross) or 100% of relevant earnings
* Employers will obtain tax relief on employer contributions if they are paid and made wholly and exclusively. Tax relief for large contributions may be spread over several years.
* Any contributions in excess of £235,000 (£225,000), whether personal or by the employer, will be subject to tax on the individual at 40%
* No carry back of pension contributions.

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Car and Fuel Benefits
Company cars 2008/09
CO2 emissions (g/km) (round down to nearest 5g/km)% of car’s list price taxedFuel benefit (£16,900 x %)
up to 135152,535
140162,704
145172,873
150183,042
155193,211
160203,380
165213,549
170223,718
175233,887
180244,056
185254,225
190264,394
195274,563
200284,732
205294,901
210305,070
215315,239
220325,408
225335,577
230345,746
235 and above355,915
* For diesel cars add a 3% supplement, but maximum still 35%. This is waived for Euro IV diesels. From 2006/07, no waiver for diesels registered on/after 1 January 2006
* Discounts apply to certain environmentally friendly cars.
* From 2008/2009 a new 10% rate applies to non-electric cars with emissions of no more than 120gm/km. Environmentally friendly discounts do not apply to these cars but the diesel supplement does.
* For cars registered before 1.1.98 charge is based on engine size.
* The list price includes accessories and is subject to an upper limit of £80,000.
* List price is reduced for capital contributions made by the employee up to £5.000.
Fuel Benefit
* The fuel benefit charge is proportionally reduced if provision of private fuel ceases part way through the year.
* The fuel benefit is reduced to nil only if the employee pays for all private fuel.
Van benefits per vehicle
2008/2009 and 2007/2008
£
Van Benefit
£ 3,000
Fuel Benefit
£ 500
The charges will not apply if a "restricted private use condition" is met throughout the tax year.

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Mileage Allowance Payments
Cars and vans2008/09 and 2007/08 Rate per mile
Up to 10,000 miles40p
Over 10,000 miles25p
Bicycles20p
Motorcycles24p

These rates represent the maximum tax-free mileage allowances for employees using their own vehicles for business. Any excess is taxable. If the employee receives less than the statutory rate, tax relief can be claimed on the difference.

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Individual Savings Accounts (ISA's)
2008/2009£
Overall investment limit  7,200

Comprising:

- cash up to3,600 max
- balance in stocks and shares7,200 max

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Corporation Tax
Year to 31.3.09
Profits Band
£
Rate
%
Small companies rate0 - 300,00021*
Marginal (small comp) rate300,001 - 1,500,00029.75*
Full rateOver 1,500,00028*
Small companies fraction7/400*

Year to 31.3.08
Profits Band
£
Rate
%
Small companies rate0 - 300,00020
Marginal (small comp) rate300,001 - 1,500,00032.5
Full rateOver 1,500,00030
Small companies fraction1/40

The profits limits are reduced for accounting periods of less than 12 months and for a company with associated companies.
* Different rates apply for ring-fenced (broadly oil industry) profit.

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Capital Allowances
Plant and Machinery - Annual Investment Allowance (AIA)
The AIA gives a 100% write off on most types of plant and machinery costs, including integral features and long life assets but not cars, of up to £50,000 p.a.
Any costs over the AIA fall into the normal capital allowance pools at either 10% or 20%.

The AIA applies to all expenditure on or after 6 April 2008 (1April 2008 for companies) by all businesses. Special rules apply for accounting periods straddling these dates. The £50,000 limit may need to be shared between certain businesses under common ownership.

Other Plant and Machinery Allowances
The annual rate of allowance is 20% (25%) from 6 April 2008 (1April 2008 for companies). The 20% rate also applies to cars, with an over-riding maximum of £3,000 per car. Special rates apply for accounting periods straddling these dates. First year allowances are abolished except a 100% allowance may still be available on certain energy efficient plant and cars.

Industrial and agricultural buildings and hotels
The annual rate of allowance is 3% (4%) from 6 April 2008 (1 April 2008 for companies). Special rules apply for accounting periods straddling these dates.

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Value Added Tax
Standard Rate17.5%
Lower Rate5%
Annual Registration Limit - from 1 April 2008
(1.4.07 - 31.3.08 £64,000)
£67,000
Annual Deregistration Limit - from 1 April 2008
(1.4.07 - 31.3.08 £62,000)
£65,000
 
 


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Capital Gains Tax
2008/092007/08
Individuals- exemption£9,600£9,200
For 2008/2009 balance of gains charged at 18%
For 2007/2008 Balance of gains (reduced by taper relief*) charged as top slice of income (at savings rates - ie 10%, 20% or 40%)
Trusts- exemption£4,800£4,600
- balance of gains (reduced by taper relief* for 2007/2008 )18%40%
 
Entrepreneurs' Relief
For gains arising on or after 6 April 2008, the first £1m of qualifying gains are charged at an effective rate of 10%. Gains in excess of £1m are charged at 18%.

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Inheritance Tax
Chargeable Transfers
Death Rate
%
Lifetime Rate
%
2007/08
£’000
2007/08
£’000
NilNil0 - 312*0 - 300
4020Over 312*Over 300

* Potentially increased for surviving spouses or civil partners who die on or after 9 October 2007.

Reliefs
Annual exemption£3,000Marriage†parent£5,000
Small gifts£250†grandparent£2,500
†bride/groom£2,500
†other£1,000
Reduced charge on gifts within seven years of death
Years before death0-33-44-55-66-7
% of death charge10080604020

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Stamp Duty
Land and buildings (on full consideration paid)
RateResidential propertyNon-residential
Disadvantaged areasOther
£££
Nil0-150,0000-125,0000-150,000
1%150,001-250,000125,001-250,000150,001-250,000
3%250,001-550,000250,001-500,000250,001-500,000
4%Over 500,000Over 500,000Over 500,000
 
Shares and securities - rate 0.5%

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National Insurance Contributions
Class 1 (employed)
(contracted in)
2008/09 Rates
Weekly earningsEmployerEmployee
Up to £100Nil*Nil*
£100.01 - £67012.8%**11%**
Over £67012.8%**£73.15 +1%***
* Entitlement to contribution-based benefits retained for earnings between £90.01 and £105 per week.
** On earnings above £105.
*** On earnings above £770.
Class 1A (employers)12.8% on employee taxable benefits
Class 1B (employers)12.8% on PAYE Settlement Agreements
Class 2 (self-employed)flat rate per week £2.30
small earnings exception p.a. £4,825
Class 3 (voluntary)flat rate per week £8.10
Class 4 (self-employed)8% on profits between £5,435 and £40,040 plus 1% on profits over £40,040

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Main Social Security Benefits
Weekly Benefit
2008/092007/08
Basic retirement pension-†single†person£90.70£87.30
- married couple £145.05£139.60
Statutory pay rates- Average weekly earnings £90 (£87) or over
Statutory Sick Pay£75.40£72.55
Statutory Maternity Pay
- first six weeks90% of weekly earnings
- next 33 weeks*£117.18*£112.75*
Statutory Paternity Pay - two weeks£117.18*£112.75*
Statutory Adoption Pay - 39 weeks£117.18*£112.75*
* Or 90% of weekly earnings if lower

 

For further information, please contact us at on 01384 395 600. Email us at info@armstrongchase.co.uk