|
|
Income Tax
| |
2008/2009 |
2007/2008 |
|
Starting rate band - on first
|
-
|
10% |
£2,230
|
10% |
|
Basic band – on next
|
£36,000
|
20% |
£32,370
|
22% |
|
Higher rate band – income over
|
£36,000
|
40% |
£34,600
|
40% |
For 2008/09 dividends taxed at 10% on income below
£36,000 (2007/08: £34,600) and 32.5% for higher rate taxpayers.
From 2008/09 there is a 10% starting rate for savings
income upto £2,320
Allowances that Reduce Taxable Income
|
Personal allowance
|
2008/2009
|
2007/2008
|
|
Under 65
|
£5,435
|
£5,225
|
|
65 to 74
|
£9,030
|
£7,550
|
|
75 and over
|
£9,180
|
£7,690
|
Allowances that Reduce Tax
|
Married couples
allowance
|
2008/2009
|
2007/2008
|
|
Tax reduction under 65
|
-
|
-
|
|
65 to 74 *
|
£653.50
|
£628.50
|
|
75 and over *
|
£662.50
|
£636.50
|
*Married couples
allowance is only available if at least one spouse was born before
6th April 1935.
The higher rates of personal allowances, where
either party is 65 or over, are reduced by £1 for every £2 excess
income over £21,800 (2007/2008 £20,900) until the basic personal
allowance is reached.
Tax Credits
Working Tax Credit (WTC) and Child Tax Credit (CTC)
were introduced in 2003/04. The rates of WTC for 2008/09 have
been increased in line with inflation and the child element of the
CTC increases by £175 above average earnings.
Childcare
Since April 2005 indirect
childcare funding by employers (including the use of vouchers) of £55
p.w. has been exempt from tax and NIC (2007/2008£55 p.w).
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