Income Tax Rates
| Tax rates | Note | 2008/09 |
2007/08 |
|
| Starting rate band | £2,320 | £2,230 | ||
| Tax rate | 10%* | 10% | ||
| Basic rate band | £36,000 | £32,370 | ||
| Basic rate | 20% | 22% | ||
| Savings rate | * see below | 20% | ||
| Dividend ordinary rate | 10% | 10% | ||
| Higher rate - taxable income over | £36,000 | £34,600 | ||
| Higher tax rate | 40% | 40% | ||
| Dividend upper rate | 32.5% | 32.5% | ||
| * 10% starting rate for savings income up to £2,320. Not applicable if taxable non-savings income exceeds £2,320. | ||||
| Allowances that reduce taxable income | ||||
| Personal allowance (PA) | under 65 | 1 | £5,435 | £5,225 |
| 65 to 74 | 1,3 | £9,030 | £7,550 | |
| 75 and over | 1,3 | £9,180 | £7,690 | |
| Blind person's allowance | £1,800 | £1,730 | ||
| Allowances that reduce tax | ||||
| Married couple's allowance (MCA) | ||||
| Tax reduction | 74 | 1,2,3 | £653.50 | £628.50 |
| 75 and over | 1,2,3 | £662.50 | £636.50 | |
| The age-related allowances are progressively withdrawn if income exceeds | £21,800 | £20,900 | ||
| Minimum PA | £5,435 | £5,225 | ||
| Minimum MCA tax reduction | £254 | £244 | ||
| Tax Shelters | ||||
| Enterprise Investment Scheme (EIS) up to | 5 | £500,000 | £400,000 | |
| Venture Capital Trust (VCT) up to | £200,000 | £200,000 | ||
| Rent a Room - exempt on gross annual rent up to | £4,250 | £4,250 | ||
| Construction Industry Scheme deduction rate: | ||||
| Standard (registered) | 20% | 20% | ||
| Higher (not registered) | 30% | 30% | ||
