*
                       
 
 


information

income tax

Income Tax Rates
Rates for 2008/09 are as follows:
Note
 2008/09
2007/08

Starting rate band to
 Tax rate
* see below
N/A
£2,230
10%
Basic rate band
 Basic rate
 Savings rate
 Dividend ordinary rate
**£34,800
20%
* see below
10%
£32,370
22%
20%
10%
Higher rate - taxable income over
 Higher tax rate
 Dividend upper rate

* 10% starting rate for savings income up to £2,320. Not applicable if taxable non-savings income exceeds £2,320.
**£34,800
40%
32.5%
£34,600
40%
32.5%
Trusts
For interest in possession trusts on all income, and other trusts on the first £1,000 of income
("standard rate band"):
   dividend ordinary rate
   savings income
   other income
 Income of other trusts above £1,000 is taxed at the special trust rates:
  rate applicable to trusts
  dividend trust rate





4
4
4





10%
20%
20%
£1,800


40%
32.5%





10%
20%
22%
£1,730


40%
32.5%
Allowances that reduce taxable income
Personal allowance (PA)
 under 65
 65 to 74
 75 and over
 Blind person's allowance



1
1,3
1,3



**£6,035
£9,030
£9,180
£1,800



£5,225
£7,550
£7,690
£1,730

Allowances that Reduce Tax
Married couples allowance (MCA)
Tax reduction         74
                           75 and over
The age-related allowances are progressively withdrawn if income exceeds
Minimum PA
Minimum MCA tax reduction



1,2,3
1,2,3



£653.50
£662.50
£21,800


**£6,035
£254



£628.50
£636.50
£20,900


£20,900
£244

Tax Shelters
Enterprise Investment Scheme (EIS) up to 
Venture Capital Trust (VCT) up to
Golden Handshake max
Rent a room - exempt on gross annual rent up to
Construction Industry Scheme deduction rate:
Standard (registered)
Higher (not registered)


5


£500,000

£200,000
£30,000
£4,250



20%
30%


£400,000

£200,000
£30,000
£4,250



20%
30%

Notes
  1. Ages are as the end of the tax year. Ages for the MCA relate to the elder if spouse or civil partner
  2. MCA is available only to those couples where at least one spouse or civil partner was born before 6 April 1935
  3. The higher rates of personal allowances are reduced by £1 for each £2 of excess income over £21,800 (2007/08 £20,900) 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 (2007/08 £244) is reached. (For couple's 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).
  4. Where there are several trusts created by the same settlor, the "standard rate band" is divided equally between them, subject to a minimum band of £200 for each trust.
  5. Start date for 2008/09 increase is subject to European Commission approval.

    Figures marked with a ** are based on recent revisions to the original announcements made in the 2008 Budget and have yet to be finally confirmed.