Budget 2007

 

Tax Rates and Allowances

Rates and allowances for income tax, corporation tax, capital gains tax, inheritance tax and stamp taxes are set out below:

Income Tax Personal and Age-related Allowances 2007-08

£ per year (unless stated)

2006-07

Change

2007-08

Personal allowance (age under 65)

£5,035

+£190

£5,225

Personal allowance (age 65-74)

£7,280

+£270

£7,550

Personal allowance (age 75 and over)

£7,420

+£270

£7,690

Married couple’s allowance (born after 6/4/35 to age 75)

£6,065

+£220

£6,285

Married couple's allowance* (age 75 and over)

£6,135

+£230

£6,365

Income limit for age-related allowances

£20,100

+£800

£20,900

Blind Person’s Allowance

£1,660

+£50

£1,730

 

Income tax: taxable bands

2006-07 (£)

2007-08 (£)

Starting rate: 10 per cent

0-2,150

0-2,230

Basic rate: 22 per cent*

2,151-33,300

2,231-34,600

Higher rate: 40 per cent

Over 33,300

Over 34,600

* The rate of tax applicable to savings income remains at 20 per cent for income between the starting and basic rate limits. The rates applicable to dividends are 10 per cent for income up to the basic rate limit and 32.5 per cent above that.

Income tax rates and allowances

The income tax starting rate limit and basic rate limit are to increase in line with indexation.

From the 2008-09 tax year the 10% starting rate will be abolished.  The basic rate will fall to 20% and the threshold for higher rate will increase to £43,000.

Capital Gains Tax (CGT)

The capital gains tax (CGT) annual exempt amount is increased in line with statutory indexation to £9,200

The amount chargeable to CGT is added to the individual's income liable to income tax and treated as the top part of that total. For 2006-2007, CGT up to the starting rate limit will be charged at 10 per cent, between the starting rate and basic rate limits at 20 per cent, and above the basic rate limit at 40 per cent.

Inheritance Tax

The inheritance tax threshold is increased by more than statutory indexation to £300,000 for the tax year 2007-08.

The threshold will be £350,000 by 2010-11.

Stamp Taxes and duties on transfers of land and buildings (consideration paid)

For properties up to £125,000 no stamp duty will be paid.  Up to £250,000 the rate will be 1%.  Up to £500,000 it will be 3% and anything over will be charged at 4%.

For zero carbon homes built after 1st October 2007 and for a period of 5 years they will be exempt from Stamp Duty Land Tax.

Venture Capital Trust Schemes (VCTs)

Whilst the limit on investment and income tax relief are unchanged there has been a significant change to these investments.  From 6th April 2007 a new VCT must only invest in companies with fewer than 50 employees and the company must only have raised £2million within the last 12 months from VCTs.

This effectively increases the risk of VCTs by forcing them to invest in even smaller companies.

Individual Savings Accounts

The annual contribution to an ISA from 6th April 2008 will be increased to £7,200.  For Mini ISAs this means a contribution of up to £3,600 into a Mini Cash ISA and £3,600 into a Mini Equity ISA.  It will also become possible to transfer from a Mini Cash ISA into a Mini Equity ISA but not the reverse.

Pension Schemes

The annual contribution limit has been raised to £225,000 and the lifetime allowance increased to £1.6million from 6th April 2007.

Tax Return Filing

For 2007-08 and all subsequent years the filing date of 31st January after the year end will only remain for those filing online.  For paper based filing the return must be made by 31st October.

 

 

 

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