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.

Continued...

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Comments

September

Anonymous | | Permalink

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?

mikeyban | | Permalink

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?

Regarding comments below

Anonymous | | Permalink

These tables were first published with Budget 2008, hence date of comments made below this posting.

Can someone please check ...

AnonymousUser | | Permalink

... 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

Corrected

Anonymous | | Permalink

Sorry Clint, thanks for pointing it out!

Not just Class 4

Peter Cane | | Permalink

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.

Sneek taxes

Anonymous | | Permalink

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.

10% tax rate on interest income

Laurence52 | | Permalink

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?

RebeccaBenneyworth's picture

NIC limits

RebeccaBenneyworth | | Permalink

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.

Hey Mehmet

petestar1969 | | Permalink

Maybe you should advise your small business clients to incorporate and avoid class4 NIC altogether

mileswaterman's picture

SMALL BUSINESS KILLER

mileswaterman | | Permalink

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?