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Budget 2008 (TAKE TWO): Tax tables
Updated tables following the chancellor of the exchequor's announcement on 13 May 2008 to increase the personal allowance (age under 65) by an extra £600.National Insurance:
Note that the lower limit for employees and the self-employed for National Insurance are no longer aligned with personal allowances.
For example: Employee on £18,000 p.a.
| Gross pay for tax | 18,000 | Gross for National insurance | 18,000 | |||
| Personal allowance | 6,035 | Primary threshold | £105 x 52 weeks | 5,460 | ||
| Net for tax | 11,965 | Net earnings for NI | 12,540 | |||
| Tax @ | 20% | 2,393.00 | NI @ | 11% | 1,379.40 | |
| Total tax and NI | = | £3,772.40 |
For example: Self-employed with profits of £18,000 p.a
| Profit for tax | 18,000 | Profit for NI | 18,000 | |||
| Personal allowance | 6,035 | Lower Class 4 NI threshold | 5,435 | |||
| Taxable | 11,965 | NI'able | 12,565 | |||
| Tax @ | 20% | 2,393 | NI @ | 8% | 1,005.20 | |
| Class 2 NI | £2.30 | 119.60 | ||||
| Total tax and NI | = | £3,517.80 | ||||
2008 Budget tables:
Income tax, capital gains tax, and inheritance tax
| £ per year (unless stated) | 2007-08 | Change | 2008-09 |
| Income tax personal and age-related allowances | |||
| Personal allowance (age under 65) | £5,225 | +£810 | £6,035 |
| Personal allowance (age 65-74) | £7,550 | +£1,480 | £9,030 |
| Personal allowance (age 75 and over) | £7,690 | +£1,490 | £9,180 |
| Married couple's allowance* (aged less than 75 and born before 6th April 1935) | £6,285 | +£250 | £6,535 |
| Married couple's allowance* (age 75 and over) | £6,365 | +£260 | £6,625 |
| Married couple's allowance* - minimum amount | £2,440 | +£100 | £2,540 |
| Income limit for age-related allowances | £20,900 | +£900 | £21,800 |
| Blind person’s allowance | £1,730 | +£70 | £1,800 |
| Capital gains tax annual exempt amount | |||
| Individuals etc. | £9,200 | +£400 | £9,600 |
| Most trustees | £4,600 | +£200 | £4,800 |
| Individual inheritance tax allowance | £300,000 | +£12,000 | £312,000 |
| Pension schemes allowances | |||
| Annual Allowance | £225,000 | +£10,000 | £235,000 |
| Lifetime Allowance | £1,600,000 | +£50,000 | £1,650,000 |
Income tax: Taxable bands
| 2007-08 | £ per year | 2008-09 | £ per year |
| Starting rate: 10% | £0-£2,230 | - | - |
| Basic rate: 22% | £2,231-£34,600 | Basic rate: 20%* | £0-£34,800 |
| Higher rate: 40% | Over £34,600 | Higher rate: 40%* | Over £34,800 |
Corporation tax on profits
| £ per year (unless stated) | 2007-08 | 2008-09 |
| £0-£300,000 | 20% | 21% |
| £300,001 - £1,500,000 | Marginal relief | Marginal relief |
| £1,500,001 or more | 30% | 28% |
National insurance contributions
| £ per week (unless stated) | 2007-08 | Change | 2008-09 |
| Lower earnings limit, primary Class 1 | £87 | +£3 | £90 |
| Upper earnings limit, primary Class 1 | £670 | +£100 | £770 |
| Primary threshold | £100 | +£5 | £105 |
| Secondary threshold | £100 | +£5 | £105 |
| Employees’ primary Class 1 rate between primary threshold and upper earnings limit | 11% | - | 11% |
| Employees’ primary Class 1 rate above upper earnings limit | 1% | - | 1% |
| Employees’ contracted-out rebate - salary-related schemes | 1.6% | - | 1.6% |
| Employees’ contracted-out rebate - money-purchase schemes | 1.6% | - | 1.6% |
| Married women’s reduced rate between primary threshold and upper earnings limit | 4.85% | - | 4.85% |
| Married women’s rate above upper earnings limit | 1% | - | 1% |
| Employers’ secondary Class 1 rate above secondary threshold | 12.8% | - | 12.8% |
| Employers’ contracted-out rebate, salary-related schemes | 3.7% | - | 3.7% |
| Employers’ contracted-out rebate, money-purchase schemes | 1.4% | - | 1.4% |
| Class 2 rate | £2.20 | +£0.10 | £2.30 |
| Class 2 small earnings exception (per year) | £4,635 | +£190 | £4,825 |
| • Special Class 2 rate for share fishermen | £2.85 | +0.10 | £2.95 |
| Special Class 2 rate for volunteer development workers | £4.35 | +£0.15 | £4.50 |
| Class 3 rate (per week) | £7.80 | £0.30 | £8.10 |
| Class 4 lower profits limit (per year) | +£5,225 | +£210 | £5,435 |
| Class 4 upper profits limit (per year) | £34,840 | +£5,200 | £40,040 |
| Class 4 rate between lower profits limit and upper profits limit | 8% | - | 8% |
| Class 4 rate above upper profits limit | 1% | - | 1% |
Working and child tax credits rates
| £ per year (unless stated) | 2007-08 | Change | 2008-09 |
| Working Tax Credit | |||
| Basic element | £1,730 | +£70 | £1,800 |
| Couple and lone parent element | £1,700 | +£70 | £1,770 |
| 30 hour element | £705 | +£30 | £735 |
| Disabled worker element | £2,310 | +£95 | £2,405 |
| Severe disability element | £980 | +£40 | £1,020 |
| 50+ Return to work payment (16-29 hours) | £1,185 | +£50 | £1,235 |
| 50+ Return to work payment (30+ hours) | £1,770 | +£70 | £1,840 |
| Childcare element of the Working Tax Credit | |||
| Maximum eligible cost for one child | £175 per week | - | £175 per week |
| Maximum eligible cost for two or more children | £300 per week | - | £300 per week |
| Percentage of eligible costs covered | 80% | - | 80% |
| Child Tax Credit | |||
| Family element | £545 | - | £545 |
| Family element, baby addition | £545 | - | £545 |
| Child element | £1,845 | +£240 | £2,085 |
| Disabled child element | £2,440 | +£100 | £2,540 |
| Severely disabled child element | £980 | +£40 | £1,020 |
| Income thresholds and withdrawal rates | |||
| First income threshold | £5,220 | +£1,200 | £6,420 |
| First withdrawal rate | 37% | +2% | 39% |
| Second income threshold | £50,000 | - | £50,000 |
| Second withdrawal rate | 6.67% | - | 6.67% |
| First threshold for those entitled to Child Tax Credit only | £14,495 | +£1,080 | £15,575 |
| Income disregard | £25,000 | - | £25,000 |
| £ per week | 2007-08 | Change | 2008-09 |
| Eldest/Only Child | £18.10 | +£0.70 | £18.80 |
| Other Children | £12.10 | +£0.45 | £12.55 |
| Guardian’s Allowance | £12.95 | +£0.50 | £13.45 |
Stamp taxes and duties
Transfers of land and buildings (consideration paid)
| Rate | Residential in disadvantaged areas | Residential outside disadvantaged areas | Non-residential |
| Total value of consideration | |||
| Zero | £0 - £150,000 | £0 - £125,000 | £0 - £150,000 |
| 1% | Over £150,000 - £250,000 | Over £125,000 - £250,000 | Over £150,000 - £250,000 |
| 3% | Over £250,000 - £500,000 | Over £250,000 - £500,000 | Over £250,000 - £500,000 |
| 4% | Over £500,000 | Over £500,000 | Over £500,000 |
New leases (lease duty)Duty on the premium is the same as for transfers of land (except that special rules apply for non-residential land and property premium where rent exceeds £1,000 annually. The rules no longer apply to residential property from 12 March 2008). Duty on the rent is charged on any part of the net present value (NPV) which exceeds the threshold.
| Rate | Net Present Value of rent | ||
| Residential in disadvantaged areas | Residential outside disadvantaged areas | Non-residential | |
| Slice of NPV | |||
| Zero | £0 - £150,000 | £0 - £125,000 | £0 - £150,000 |
| 1% | Over £150,000 | Over £125,000 | Over £150,000 |
Number of comments: 13
AccountingWEB.co.uk 16-May-2008
Categories: Budget News, Tax Features, Tax - Nicki Ross Martin
Times read: 19785
According to the chancellor. So employers should not amend codes until HMRC gives the official go-ahead.
Nichola Ross Martin
Tax editor, AccountingWEB.co.uk
When is this to start .......ie when are employers to be notified to operate this change and how much is the treasury going to spend on this in advertising?
Sorry Clint, thanks for pointing it out!
... is this correction right? I had heard that there was to be a compensating restriction in the basic rate tax band by £1200, but the table still shows £36000
These tables were first published with Budget 2008, hence date of comments made below this posting.
Very Informative Tables, congratulation.
Mayur Dave
Cmd Accountancy
14/03/08
The Class 1 and 4 Upper Earnings / Profit limit is actually exactly the amount they forecast this time last year. The promise was to increase by £75 per week above inflation, and some draft amounts based on inflation predictions were set out last March. Their inflation prediction was good, as the amounts are smack on what we were told.
However, someone earning £40,040 in each year will pay the following :
An extra £497 pa in NIC (£347 for self employed)
£638 less in tax. Net position Employee £141 better off, self employed £291 better off, less about £5 for the increase in Class 2.
Next year will see an above inflation increase of £800 in the Higher rate threshold, with NIC upper limits then increased to meet it - current expectation is for around another £3,900 per annum on the main NIC band, or a further £75 per week. This would leave the highest earners around £130 per annum worse off.
The employees' Upper Earning Limit was going to be increased by £75 pw. or £3,900 p.a. according to Mr Brown in Budget 2007.
Darling has inceased this to £100 p.w. or £5,200 p.a.
This appears to be largely unnoticed.
But Class 1 NI threshold has gone up too.
So anyone earning £40k or thereabouts is going to get a big shock come April pay day. The extra NI will more than cancel out the gain from the tax rate going down.
EDIT: Yes, I agree with Rebecca's calculations. Most people should be in a net gain situation, at least for 2008/09.
So if my reading of the 10% tax rate on savings is correct then if the taxable savings income is £2320 gross or less, the tax rate is 10%. If over £2320 then the standard rate applies. So if your savings income is £2320 you get £2088 net. If your savings income is over £2320 but less than £2610 you get under £2088 net. So if your savings income is likely to be in this band you must be tempted just to spend the excess savings just to protect your income.
Is my understanding correct?
Maybe you should advise your small business clients to incorporate and avoid class4 NIC altogether
Governments like small businesses (I don’t really think it matters that Labour are in power) because they can easily be stuck with extra taxes to raise money. HMRC staff are having their salaries/positions cut in order to reduce costs. That’s how they raise money, I wouldn’t get upset about it.
As for Class 4, since they brought in the 1% upper rate I’ve been waiting for that 1% rate to “move in line” with the “normal rate”. No doubt they would argue it would make things “less bureaucratic”, “cut costs” and make the system “fairer” etc etc.
I’ve a client who won’t be complaining, the CGT liability on the profits from the sale (prices have stagnated, rather than fallen) of his houses will be reduced. Once that is done, he will be emigrating.
What has the labour government got against small businesses?
biggest killer being the upper threshold of class 4 to over £40000!!!! this is effectively a potential extra £364pa with the penalties of owning a decent car and new car taxes, Ken Livingstone may as well have written this budget!
Were there any benefits for small business that I have missed?
