Bands 2008/09 2007/08
£ £
Starting * 2, 230
Basic 36,000 32, 370
Higher over 36,000 over 34,600
Starting rate band within basic rate band for savings income only: £2,320.
Rates differ for Dividend, Interest and Other income within each band:
Rates 2008/09 2007/08
G I D G I D
Lower N/A 10% 10% 10% 10% 10%
Basic 20% 20% 10% 20% 22% 20%
Higher 40% 40% 32.5% 40% 40% 32.5%
General income (salary, profit, rent) uses starting rate and basic rate bands before savings income. Dividends are taxed as the ‘top slice’ of income.
When the basic rate of income tax is cut, charities suffer a reduction in the tax they can claim back on Gift Aid donations. Charities and Community Amateur Sports Clubs will be temporarily protected from this drop in income in spite of the cut in basic rate on 6 April 2008: for the three years 2008/09 to 2010/11, they will still claim 28.2% of Gift Aid donations as if the basic rate was 22%. In 201 1/12, according to the current proposals, the relief will drop to 25% for the charity. An individual will claim higher rate tax relief on the basis that the cash gift was 80% of a gross donation.
Income split between husband and wife
After the House of Lords ruled in 2007 that the taxman could not attack a tax efficient split of income between a husband and wife owning a small company together (the case of Garnett v Jones, also known as “Arctic Systems”) the Government announced that the law would be changed to make sure that married couples in this situation “paid their fair share of tax”.
Detailed proposals were published in December 2007 to reverse the benefit of “uncommercial
income shifting” for tax. The Government appears to have heeded the criticism that
the proposals would have made self-
Remittance basis for foreign domiciled people
In the October Pre-
As announced in October, a number of significant changes will be made from
6 April 2008. The most striking is the imposition of a flat rate £30,000 charge on those who choose to be taxed on remittances after being UK resident for 7 years. This will not apply to anyone who opts to be taxed on foreign income as it arises, or to someone with no more than £2,000 in overseas income and gains.
Tax Tip-
In deciding whether a person is resident in the UK for tax purposes, it is necessary to count the number of days spent in the UK. Until 5 April 2008, the Revenue’s normal practice has been to ignore days of arrival and departure, which was very favourable to the taxpayer. From 6 April 2008, a day will be counted if the person is in the UK at midnight. This is more generous than the October announcement, which would have counted days of arrival and departure.
The rates of Working Tax Credit (WTC) and Child Tax Credit (CTC) for 2008/09 have been in many cases increased in line with inflation, but some elements have not (e.g. the “family element” of £545 which is available to couples with children and combined income up to £50,000, which remains unchanged). The full table of rates is too large and complex for this brief summary.
Personal Income Tax
Income split between husband and wife
