Keens Shay Keens - Chartered Accountants in Luton, Bedford & Biggleswade

Tax Rates & Allowances 2008/09

Authorised Mileage Rates:

Cars	up to 10,000 miles - 40p
	over 10,000 miles - 25p
Bicycles:	20p
Motorcycles:	24p

These rates represent the maximum tax-free mileage allowances for employees using their own vehicles for business. Any excess is taxable. If the employee receives less than the statutory rate, tax relief can be claimed on the difference.

Capital Allowances:

Plant and machinery - Annual Investment Allowance (AIA)
The AIA gives a 100% write-off on most types of plant and machinery costs, including integral features and long-life assets but not cars, of up to £50,000 p.a. Any costs over the AIA fall into the normal capital allowance pools at either 10% or 20%.

The AIA applies to expenditure incurred on or after 6 April 2008 (1 April 2008 for companies) by all businesses. Special rules apply for accounting periods straddling these dates. The £50,000 limit may need to be shared between certain businesses under common ownership.

Other plant and machinery allowances
The annual rate of allowance is 20% (25%) from 6 April 2008 (1 April 2008 for companies). The 20% rate also applies to cars, with an overriding maximum of £3,000 per car. Special rules apply for accounting periods straddling these dates. First year allowances are abolished except a 100% allowance may still be available on certain energy efficient plant and cars.

A new 10% rate applies to expenditure incurred on integral features and on long life assets on or after 6 April 2008 (1 April 2008 for companies). Long life asset expenditure brought forward will obtain the 10% rate (6%), with special rules applying for accounting periods straddling these dates.

Industrial and agricultural buildings and hotels
The annual rate of allowance is 3% (4%) from 6 April 2008 (1 April 2008 for companies). Special rules apply for accounting periods straddling these dates.

Capital Gains Tax:

		2008/09	2007/08
Individuals	- exemption	£9,600	£9,200
For 2008/09, balance of gains charged at 18%. For 2007/08, balance of gains (reduced by taper relief*) charged as top slice of income (at savings rates i.e. 10%, 20% or 40%).


Trusts	- exemption	£4,800	£4,600
	- balance of gains (reduced by taper relief* for 2007/08).	18%	40%
*Taper relief abolished for gains arising on or after 6 April 2008.

Car & Fuel Benefits:

Company cars 2008/09
CO₂ emissions (gm/km) (round down to nearest 5gm/km)	% of car’s list price taxed	Fuel benefit (£16,900 x %)
up to 135	15	2,535
140	16	2,704
145	17	2,873
150	18	3,042
155	19	3,211
160	20	3,380
165	21	3,549
170	22	3,718
175	23	3,887
180	24	4,056
185	25	4,225
190	26	4,394
195	27	4,563
200	28	4,732
205	29	4,901
210	30	5,070
215	31	5,239
220	32	5,408
225	33	5,577
230	34	5,746
235 and above	35	5,915

Company cars

For diesel cars add a 3% supplement but maximum still 35%. Euro IV diesel cars registered before 1 January 2006 do not suffer the 3% supplement.
Discounts apply to certain environmentally friendly cars.
From 2008/09 a new 10% rate applies to non-electric cars with emissions of no more than 120gm/km. Environmentally friendly discounts do not apply to these cars but the diesel supplement does.
For cars registered before 1 January 1998 the charge is based on engine size.
The list price includes accessories and is subject to an upper limit of £80,000.
The list price is reduced for capital contributions made by the employee up to £5,000.

Fuel benefits

The fuel benefit charge is proportionately reduced if provision of private fuel ceases part way through the year.
The fuel benefit is reduced to nil only if the employee pays for all private fuel.

Van benefit per vehicle (2008/09 and 2007/08)

Van Benefit: £3,000
Fuel Benefit: £500

The charges will not apply if a ‘restricted private use condition’ is met throughout the year.

Corporation Tax:

	Years to 31.3.09		Years to 31.3.08
	Profits Band £	Rate %	Profits Band £	Rate %
Small companies rate	0 - 300,000	21*	0 - 300,000	20
Marginal (small companies) rate	300,001 - 1,500,000	29.75*	300,001 - 1,500,000	32.50
Full rate	Over 1,500,000	28*	Over 1,500,000	30
Small companies fraction		7/400*		1/40

The profits limits are reduced for accounting periods of less than 12 months and for a company with associated companies.

*Different rates apply for ring-fenced (broadly oil industry) profit.

Income Tax Rates:

2008/09		2007/08
Band £	Rate %	Band £	Rate %
0 - 2,320	10*	0 - 2,230	10
2,321 - 34,800****	20 **	2,231 - 34,600	22 **
Over 34,800****	40 ***	Over 34,600	40 ***

* Only applicable to dividends and savings income.

** Except dividends (10%) and, in 2007/08, savings income (20%).

***Except dividends (32.5%)

**** On Tuesday 13 May 2008 the Chancellor announced that the personal allowance for the 2008/09 tax year will be increased by £600 from £5,435 to £6,035, and the threshold at which someone starts to pay higher rate tax will be reduced from £36,000 to £34,800. This was confirmed in the Finance Act 2008, which received Royal Assent on 21 July 2008.

The point at which individuals start to pay higher rate income tax is sometimes called the “higher rate threshold”. It is the total of the personal allowance and the basic rate limit. Higher rate taxpayers will see no difference in the amount of tax they pay.

Other income taxed first, then savings income and finally dividends.

Income Tax Reliefs:

		2008/09 £	2007/08 £
Personal allowance	- under 65	6,035**	5,225
	- 65 - 74 *	9,030	7,550
	- 75 and over *	9,180	7,690
Married couple's allowance (relief at 10%)	- aged less than 75 and born before 6.4.35 *	6,535	6,285
	- 75 and over*	6,625	6,365
	- min. amount	2,540	2,440
* Age allowance income limit		21,800	20,900
(reduce age allowance by £1 for every £2 of excess income over £21,800)
Blind person’s allowance		1,800	1,730

** On Tuesday 13 May 2008 the Chancellor announced that the personal allowance for the 2008/09 tax year will be increased by £600 from £5,435 to £6,035, and the threshold at which someone starts to pay higher rate tax will be reduced from £36,000 to £34,800. This was confirmed in the Finance Act 2008, which received Royal Assent on 21 July 2008.

Other income taxed first, then savings income and finally dividends.

Inheritance Tax:

		Chargeable Transfers
Death Rate %	Lifetime Rate %	2008/09 £’000	2007/08 £’000
Nil	Nil	0 - 312*	0 - 300*
40	20	Over 312*	Over 300 *
*Potentially increased for surviving spouses or civil partners who die on or after 9 October 2007.


Reliefs:
Annual exemption	£3,000	Marriage	- parent	£5,000
Small gifts	£250		- grandparent	£2,500
			- bride/groom	£2,500
			- other	£1,000


Reduced charge on gifts within seven years of death:
Years before death	0-3	3-4	4-5	5-6	6-7
% of death charge	100	80	60	40	20

ISAs:

2008/09			£
Overall investment limit			7,200
	Comprising	- cash up to	3,600 max
		- balance in stocks and shares	7,200 max

National Insurance:

Class 1 (employed) Contracted in	2008/09 Rates
Weekly earnings	Employer	Employee
Up to £105	Nil*	Nil*
£105.01 - £770	12.8%**	11%**
Over £770	12.8%**	£73.15 +1%***
* Entitlement to contribution-based benefits retained for earnings between £90.01 and £105 per week. On earnings above £105. * On earnings above £770.

Class 1A (employers)	12.8% on employee taxable benefits
Class 1B (employers)	12.8% on PAYE Settlement Agreements
Class 2 (self-employed)	flat rate per week £2.30 small earnings exception p.a. £4,825
Class 3 (voluntary)	flat rate per week £8.10
Class 4 (self-employed)	8% on profits between £5,435 and £40,040 plus 1% on profits over £40,040

Pension Premiums (2008/09 and 2007/08):

Tax relief available for personal contributions: higher of £3,600 (gross) or 100% of relevant earnings
Employers will obtain tax relief on employer contributions if they are paid and made 'wholly and exclusively'. Tax relief for large contributions may be spread over several years.
Any contributions in excess of £235,000 (£225,000), whether personal or by the employer, will be subject to income tax on the individual at 40%.
No carry back of pensions contributions.

Social Security Benefits:

		Weekly Benefit
		2008/09	2007/08
Basic retirement pension	- single person	£90.70	£87.30
	- married couple	£145.50	£139.60

Statutory pay rates - average weekly earnings £90 (£87) or over
Statutory Sick Pay		£75.40	£72.55
Statutory Maternity Pay
- first six weeks		90% of weekly earnings
- next 33 weeks		£117.18*	£112.75*
Statutory Paternity Pay - two weeks		£117.18*	£112.75*
Statutory Adoption Pay - 39 weeks		£117.18*	£112.75*
* Or 90% of weekly earnings if lower

Stamp Duty:

Land and buildings (On full consideration paid)
Rate	Residential property		Non-residential
	Disadvantaged areas £	Other £	£
Nil	0 - 150,000	0 - 125,000*	0 - 150,000
1%	150,001 - 250,000	125,001* - 250,000	150,001 - 250,000
3%	250,001 - 500,000	250,001 - 500,000	250,001 - 500,000
4%	Over 500,000	Over 500,000	Over 500,000

Shares and securities - rate 0.5%

* New limit of £175,000 applies for transactions from 3 September 2008 for one year.

Tax Credits:

	2008/09 £	2007/08 £
Working Tax Credit (WTC)
Basic element - max.	1,800	1,730
Childcare element 80% of eligible costs up to £175 per week (£300 if two or more children)
Child Tax Credit (CTC)
Child element per child - max.	2,085	1,845
Family element	545	545
Baby addition	545	545

Reductions in maximum rates 39% (37%) of income above £6,420* (£5,220*) p.a.

*If only CTC is claimed, the threshold is £15,575 p.a. (£14,495). The family element of CTC is not reduced unless income is more than £50,000 p.a. when it is reduced by £1 for every £15 of additional income.

VAT:

Standard Rate	17.5%
Reduced Rate	5%
Annual Registration Limit - from 1.4.08 (1.4.07 - 31.3.08 £64,000)	£67,000
Annual Deregistration Limit - from 1.4.08 (1.4.07 - 31.3.08 £62,000)	£65,000

VAT Fuel Scale Charges:

Businesses must use the new scale charges from the start of their next prescribed accounting period beginning on or after 1 May 2008.

CO2 band	VAT fuel scale charge, 3 month period £	VAT on 3 month charge £	VAT exclusive 3 month charge £
120 or less	138.00	20.55	117.45
125	207.00	30.83	176.17
130	207.00	30.83	176.17
135	207.00	30.83	176.17
140	221.00	32.91	188.09
145	234.00	34.85	199.15
150	248.00	36.94	211.06
155	262.00	39.02	222.98
160	276.00	41.11	234.89
165	290.00	43.19	246.81
170	303.00	45.13	257.87
175	317.00	47.21	269.79
180	331.00	49.3	281.70
185	345.00	51.38	293.62
190	359.00	53.47	305.53
195	373.00	55.55	317.45
200	386.00	57.49	328.51
205	400.00	59.57	340.43
210	414.00	61.66	352.34
215	428.00	63.74	364.26
220	442.00	65.83	376.17
225	455.00	67.77	387.23
230	469.00	69.85	399.15
235 or more	483.00	71.94	411.06