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Personal
Taxation
| Income tax and capital
gains tax rates |
| |
| |
|
|
| Starting
rate on first |
£2,230 |
£2,150 |
| Basic
rate on next |
32,370 |
31,150 |
| Higher
rate on taxable income over |
34,600 |
33,300 |
| |
|
|
|
|
| Starting |
10% |
10% |
10% |
| Basic |
22% |
20% |
10% |
| Higher |
40% |
40% |
32.5% |
|
| |
|
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Taxable income uses up the rate bands
in the following order:
* 'general
income' (employment, business profits, rent)
* 'savings income' (mainly interest)
* 'dividends' (mainly distributions
from companies)
Capital gains (after annual exemption and taper
relief, see Personal Taxation
and Capital Gains Tax)
are added to the total income as the 'top slice'
and taxed at the rates applicable to savings income
(10%, 20% or 40%). |
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|
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| A taxpayer who pays personal (including
stakeholder) pension policy premiums, or gives cash
to charity, increases the basic rate band by the
grossed up equivalent of the payment. This means
that more tax is paid at the basic rate and less
is paid at the top rate. |
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|
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2007/08 personal tax return: due
to be filed by 31 January 2009 (online) or 31 October
2008 (paper)
* penalty for late
return: £100 (or the tax due, if less)
2007/08 tax payable:
* tax
on employment income paid under PAYE each month
* basic rate liability on savings and dividends
usually settled by receiving the income net of tax
paid or credited
* balance of tax due
under self assessment (SA):
- payments on account due 31 January 2008 and 31
July 2008, based on the 2006/07 SA income tax and
Class 4 NIC
- balance, plus any CGT, due 31 January 2009, with
the first payment on account for 2008/09
Missing any payment dates leads to interest;
missing the balancing payment date by 28 days will
lead to a 5% surcharge and a further 5%
surcharge if not paid by following 31 July. |
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|
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|
|
| Personal income tax
allowance |
£5,225 |
£5,035 |
| CGT annual exemption |
9,200 |
8,800 |
| Blind person's
allowance |
1,730 |
1,660 |
| |
|
| |
|
|
| Personal allowance
(PA) |
|
|
| * Age 65 - 74
in the tax year |
£7,550 |
£7,280 |
| * Age 75 and
over in the tax year |
7,690 |
7,420 |
| * Minimum* |
5,225 |
5,035 |
| Married couple'
allowance (MCA)** |
|
|
| * Age 65 - 74 |
6,285 |
6,065 |
| * Age 75 and
over |
6,365 |
6,135 |
| * Minimum* |
2,440 |
2,350 |
| Income Limit* |
20,900 |
20,100 |
| |
* If the taxpayer's total income
exceeds the income limit (extended for gift aid
and pension contributions), one-half of that excess
is deducted from the allowances - first from the
PA until the minimum is reached, then from the MCA
until the minimum is reached.
** Amount
depends on age of older spouse; allowed at 10%;
nil if born after 5 April 1935; reduced if marriage
took place during the tax year. |
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|
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Rent-a-room exemption for letting
out part of the taxpayer's only or main residence:
gross income of £4,250pa.
Gift
aid: on a cash gift to charity, the charity
can reclaim 22/78 (28.2%) of the donation from
the Revenue if the donor makes a declaration. The
donor increases the basic rate band by the gross
gift (100/78). The market value of gifts of land
or quoted shares can be deducted from taxable income
for full tax relief, and the charity pays no tax
on the gift received. Also "Give as you earn"
scheme allows charitable gifts to be made from pre-tax
pay, so PAYE is reduced. |
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