 |
|
Budget 2005
Note: It must be
remembered that these proposals are subject to amendment
during the
passage of the Finance Bill.
| PERSONAL TAXATION |
2005/06
|
2004/05
|
|
Personal
allowance
|
|
|
general
|
£4,895
|
£4,745
|
aged 65 or over in
year of assessment
|
£7,090
|
£6,830
|
aged 75 or over in
year of assessment
|
£7,220
|
£6,950
|
age allowance
income limit
|
£19,500
|
£18,900
|
minimum where
income exceeds limit
|
£4,895
|
£4,745
|
Married
couple’s allowance
|
|
|
(10% relief)
|
|
|
either spouse born
before 6 April 1935
|
£5,905
|
£5,725
|
either spouse aged
75 or over in year of assessment
|
£5,975
|
£5,795
|
age allowance
income limit
|
£19,500
|
£18,900
|
minimum where
income exceeds limit
|
£2,280
|
£2,210
|
|
|
|
Blind
person’s allowance
Income tax rates
|
£1,610
|
£1,560
|
Starting rate
|
10%
|
10%
|
on taxable income
up to
|
£2,090
|
£2,020
|
Basic rate
|
22%
|
22%
|
on taxable income
from starting rate limit up to
|
£32,400
|
£31,400
|
Higher rate
|
40%
|
40%
|
on taxable income
over
|
£32,400
|
£31,400
|
Lower rate on
certain interest income
|
20%
|
20%
|
Lower rate on
dividend income
|
10%
|
10%
|
Higher rate on
dividend income
|
32.5%
|
32.5%
|
| COMPANY TAXATION |
FY2005 |
FY2004 |
|
| Corporation tax
rates |
|
|
| All companies (except
below) |
30%
|
30% |
| Companies with small
profits |
19%
|
19% |
| — 19% rate limit |
£300,000
|
£300,000 |
| — marginal relief
limit |
£1,500,000 |
£1,500,000
|
| — marginal relief
fraction |
11/400 |
11/400 |
| — marginal rate |
32.75%
|
32.75% |
| Starting rate |
0%
|
0% |
| — 0% rate limit |
£10,000
|
£10,000 |
| — marginal relief
limit |
£50,000
|
£50,000 |
| — marginal relief
fraction |
19/400 |
19/400 |
| — marginal rate |
23.75%
|
23.75% |
| Non-corporate distribution
rate |
19% |
19% |
| |
|
| CAPITAL GAINS TAX |
2005/06 |
2004/05 |
|
| Rate— general |
10%*:20%*
:40%* |
10%*:20%*:40%* |
| — trustees and
personal representatives |
40%* |
34%* |
| General exemption limit |
£8,500
|
£8,200 |
| *subject to taper relief
where available |
|
|
| |
|
|
| INHERITANCE
TAX |
Transfers after 5/4/2005 |
|
Threshold
(previously £263,000 for transfers after 5 April
2004) Death rate
|
|
£275,000
40%
|
| |
|
|
| VAT
|
|
| Standard rate |
|
17.5% |
| Registration
threshold after 31 March 2005 |
|
£60,000 |
| (previously £58,000 after
31 March 2004) |
|
|
| |
|
|
| NATIONAL INSURANCE |
|
2005/06 |
|
| (2004/05
in brackets where different) |
| Class 1
Contributions |
|
|
Not
contracted out
The employee contribution is 11% of earnings
between £94 (£91) and £630 (£610) p.w. plus
1% of all earnings above £630 (£610) p.w. The
employer contribution is 12.8% of all earnings in
excess of the first £94 (£91) p.w.
Contracted out
The ‘not contracted out’ rates for
employees are reduced on the band of earnings
from £94 (£91) p.w. to £630 (£610) p.w. by
1.6%. For employers, they are reduced on the band
of earnings from £94 (£91) p.w. to £630
(£610) p.w. by 3.5% for employees in
salary-related schemes or 1.0% for employees in
money purchase schemes. In addition, there is an
employee rebate of 1.6% and an employer rebate of
3.5% or 1.0%, as appropriate, on earnings from
£82 (£79) p.w. up to £94 (£91) p.w. |
| |
|
|
| Class 1A and 1B
contributions |
|
12.8% |
| |
|
|
| Class
2 contributions |
|
|
| Flat weekly rate |
£2.10 |
(£2.05) |
| Exemption limit |
£4,345 |
(£4,215) |
| |
|
|
| Class
3 contributions |
|
|
| Flat
weekly rate |
£7.35
|
(£7.15) |
| |
|
|
| Class
4 contributions |
|
|
| 8%
on the band of profits between £4,895 (£4,745)
and £32,760 (£31,720) plus 1% on all profits
above £32,760 (£31,720). |
 |
|
|
| SAVINGS AND
INVESTMENTS |
|
|
ISA Limits
Individual Savings Account (ISA) limits of
£7,000 maximum and £3,000 for cash will be
retained until 5 April 2010.(They had been due to
fall from 6 April 2006.)
|
| |
ISAs and Child Trust
Funds
The Government will extend the rules for
qualifying investments in Individual Savings
Accounts (ISAs) and Child Trust Funds (CTFs),
allowing the holders of such accounts and
funds to invest in all retail collective
investment schemes authorised by the
Financial Services Authority (FSA). The extension will take
effect from 6 April 2006. It will cover
authorised schemes which qualify as ‘UCITS’
schemes under the European Directive on
Undertakings for Collective Investment in
Transferable Securities (‘the UCITS
Directive’), and ‘non-UCITS’
retail schemes, which have slightly more
relaxed rules, allowing access to a wider
range of investment products including real
property.
However, the schemes
must not restrict savers’ ability to
access their savings and schemes which apply
the FSA’s ‘limited redemption’
rule will not be eligible.
|
| |
Pensions Tax
Simplification
Legislation introducing an extensive and
universal new regime for personal and
occupational pensions was introduced in
Finance Act 2004 and is due to come into
force on 6 April 2006. A number of further
measures will now be added, most of them
covered in an Inland Revenue Technical Note
published on 16 February 2005, to provide
additional flexibility for pension schemes
and contributors, to clarify aspects of the
new rules, to smooth the transition from
current to new regime and to introduce
further anti-avoidance and compliance rules.
Pre-existing schemes will now have at least
until 6 April 2011 to modify their scheme
rules. |
Pension
Protection Fund
The Pension Protection Fund (PPF) was set up by
Pensions Act 2004. Its purpose is to assume
responsibility for final salary occupational
pension schemes (and other pension schemes with
defined benefit elements) whose sponsoring
employers have become insolvent, leaving
insufficient assets in the scheme. The PPF will
pay compensation to pension scheme members in
lieu of the benefits that would have been payable
under the scheme.
The PPF will be a body
corporate and will be funded by statutory levies
on eligible schemes, for which tax relief would
not necessarily be given. As it is not itself a
pension scheme, the PPF would not be able to pay
tax-free lump sums. In order to remove these
anomalies, the PPF will be given equivalent tax
treatment to that of a Revenue-approved
occupational pension scheme for 2005/06 and that
of a registered pension scheme for 2006/07
onwards (under the new universal pensions regime
due to come into effect on 6 April 2006).
| INHERITANCE
TAX |
|
|
Inheritance
Tax Threshold
The inheritance tax nil-rate band for
2005/06 is increased to £275,000. The
nil-rate band for future years has been
set at £285,000 for 2006/07 and
£300,000 for 2007/08. |
|
Residential
Property Threshold
The threshold for stamp duty land tax
on residential property has been
raised from £60,000 to £120,000. As
a result of this change, stamp duty
land tax will not be charged on
transactions in residential property
if the consideration does not exceed
£120,000. Where the consideration
exceeds £120,000 but does not exceed
£250,000, the 1% charge continues to
apply. The change in threshold
applies to transactions the effective
date of which is on or after 17 March
2005. There is however no change to
the £150,000 threshold for
residential transactions in
designated disadvantaged areas. When
the stamp duty land tax regime came
into effect on 1 December 2003, some
contracts relating to land
transactions remained within the old
stamp duty regime. Where such a
contract relates to a transaction in
residential property, the stamp duty
threshold is also raised to
£120,000.
Alcohol
Duty
The excise duty on spirits,
cider and sparkling wine is
frozen. The duty on beer and
still wine is increased by
2.6%, adding 1p to a pint of
beer and 1p to a standard
175ml glass of wine. |
| |
Tobacco
Products
The rates of duty on tobacco
products imported into, or
manufactured in, the UK are
increased by 2.6% (in line
with inflation). |
| |
Gaming
Duty
The Gross Gaming Yield
threshold for each duty band
will be increased in line
with inflation, for
accounting periods starting
on or after 1 April 2005.
The new duty bands are as
shown below:
First
£534,500
Next £1,186,500
Next £1,186,500
Next £2,078,500
Remainder |
2.5%
12.5%
20%
30%
40% |
|
|
| |
Hydrocarbon
Oils
With effect from 1 September
2005, excise duty rates on
main road fuels will be
increased by 1.22p per litre
in line with inflation. All
other hydrocarbon oils for
road fuel will also increase
in line with inflation.
Effective rates of duty for
non-road fuels will also be
increased by 1.22p per litre.
In order to maintain the
current differentials with
main road fuels, the duty
rates for biodiesel,
bioethanol and natural gas
will also be increased by
1.22p per litre. In the case
of road fuel gas other than
natural gas (e.g. liquefied
petroleum gas), the duty
differential will be narrowed
by the equivalent of 1p per
litre. |
|
|
