Home > > 2008/09 Rates and Allowances > Income Tax
Income Tax
| Tax rates | Note | 2008/09 | 2007/08 | |
| Savings starting rate band to | £2,320 | N/A | ||
| Savings starting tax band rate | 10% | N/A | ||
| Starting rate band to | N/A | £2,230 | ||
| Starting tax rate band | N/A | 10% | ||
| Basic rate band | 4 | £34,800 | £32,370 | |
| Basic tax rate | 20% | 22% | ||
| Income within basic rate band | N/A | 20% | ||
| Tax on UK dividends within starting (2007/08) and basic rate bands | 10% | 10% | ||
| Higher rate - taxable income over | 4 | £34,800 | £34,600 | |
| Higher tax rate | 40% | 40% | ||
| UK dividend rate | 32.5% | 32.5% | ||
| Trusts | ||||
| Trust rate | 40% | 40% | ||
| Schedule F trust rate | 32.5% | 32.5% | ||
| Allowances that reduce taxable income | ||||
| Personal allowance (PA) | under 65 | 1,4 | £6,035 | £5,225 |
| 65 to 74 | 1,3 | £9,030 | £7,550 | |
| 75 and over | 1,3 | £9,180 | £7,690 | |
| Blind person's allowance | £1,800 | £1,730 | ||
| Allowances that reduce tax | ||||
| Married couple's allowance (MCA) | ||||
| Tax reduction | 74 | 1,2,3 | £653.50 | £628.50 |
| 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| The age-related allowances are progressively withdrawn if income exceeds | £21,800 | £20,900 | ||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 | ||
| Non domicile charge Charge for adult non UK domiciliary - applies after UK residence in 7 or more of the previous tax years |
£30,000 | N/A | ||
| Tax Shelters | ||||
| Enterprise Investment Scheme (EIS) up to | £500,000 | £400,000 | ||
| Maximum amount for EIS carry back | £50,000 | £50,000 | ||
| 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 | ||||
| Standard rate - registered | 20% | 20% | ||
| Higher rate - not registered | 30% | 30% | ||
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 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 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).
- Personal allowance increased by £600 on 13 May 2008
The higher rate band was reduced by £1,200.
Did you know?
That the Government expect to receive £160 billion from income tax. This represents an increase of 2.8% compared to the estimated yield of £155.6 billion in the last tax year.
2008/09 Rates and Allowances
Main taxes
- Key dates and deadlines
- Income tax
- Corporation tax
- Inheritance tax
- Capital gains tax
- Value added tax
- NI contributions
- Residential property letting taxation
- Main capital allowances
- Business deductions
- Penalties for late returns