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Tax Rates & Allowances: 2007-8

Published on Mar 27, 2007 |

Income tax, capital gains tax, and inheritance tax

£ per year (unless stated)	2006-07	Change	2007-08
Income tax personal and age-related allowances
Personal allowance (age under 65)	£5,035	+£190	£5,225
Married couple's allowance* - minimum amount	£2,350	+£90	£2,440
Capital gains tax annual exempt amount
Individuals etc.	£8,800	+£400	£9,200
Most trustees	£4,400	+£200	£4,600
Inheritance tax threshold	£285,000	+£15,000	£300,000
Pension schemes allowances
Annual Allowance	£215,000	+£10,000	£225,000
Lifetime Allowance	£1,500,000	+£100,000	£1,600,000

*Married couple's allowance is given at the rate of 10 per cent.

Income tax: taxable bands

£ per year	2006-07	2007-08
Starting rate: 10%*	£0-£2,150	£0-£2,230
Basic rate: 22%*	£2,151-£33,300	£2,231-£34,600
Higher rate: 40%*	Over £33,300	Over £34,600

* The rate of tax applicable to savings income in Section 1A ICTA 1988 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. For future changes to the availability of the non-payable dividend tax credit please see below.

Corporation tax on profits

£ per year (unless stated)	2006-07	2007-08
£0-£300,000	19%	20% *
£300,001 - £1,500,000	Marginal relief	Marginal relief
£1,500,001 or more	30%	30%

* It is worth noting that the Small Firms Tax Rate not only rises from 19% to 20% in April 2007, but then 21% in April 2008 and 22% in April 2009!

National insurance contributions

£ per week (unless stated)	2006-07	Change	2007-08
Lower earnings limit, primary Class 1	£84	+£3	£87
Upper earnings limit, primary Class 1	£645	+£25	£670
Primary threshold	£97	+£3	£100
Secondary threshold	£97	+£3	£100
Employees’ primary Class 1 rate between primary threshold and upper earnings limit	11%	-	11%
Employees’ primary Class 1 rate above upper earnings limit	1%	-	1%
Employees’ contracted-out rebate - salary-related schemes	1.6%	-	1.6%
Employees’ contracted-out rebate - money-purchase schemes	1.6%	-	1.6%
Married women’s reduced rate between primary threshold and upper earnings limit	4.85%	-	4.85%
Married women’s rate above upperearnings limit	1%	-	1%
Employers’ secondary Class 1 rate abovesecondary threshold	12.8%	-	12.8%
Employers’ contracted-out rebate, salary-related schemes	3.5%	+0.2%	3.7%
Employers’ contracted-out rebate, money-purchase schemes	1%	+0.4%	1.4%
Class 2 rate (per week)	£2.10	+£0.10	£2.20
Class 2 small earnings exception	£4,465 per year	+£170	£4,635 per year
Class 3 rate (per week)	£7.55	+£0.25	£7.80
Class 4 lower profits limit	£5,035 per year	+£190	+£5,225 per year
Class 4 upper profits limit	£33,540 per year	+£1,300	£34,840 per year
Class 4 rate between lower profits limit and upper profits limit	8%	-	8%
Class 4 rate above upper profits limit	1%	-	1%

Child Benefit and Guardian’s Allowance rates

£ per week	2006-07	Change	2007-08
Eldest/Only Child	£17.45	+£0.65	£18.10
Other Children	£11.70	+£0.40	£12.10
Eldest/Only Child (Lone Parent Rate)	£17.55	ABOLISHED
Guardian’s Allowance	£12.50	+£0.45	£12.95

Stamp taxes and duties Transfers of land and buildings (consideration paid)

Rate	Residential in disadvantaged areas	Residential outside disadvantaged areas	Non-residential
	Total value of consideration
Zero	£0 - £150,000	£0 - £125,000	£0 - £150,000
1%	Over £150,000 - £250,000	Over £125,000 - £250,000	Over £150,000 - £250,000
3%	Over £250,000 - £500,000	Over £250,000 - £500,000	Over £250,000 - £500,000
4%	Over £500,000	Over £500,000	Over £500,000

New leases (lease duty)

Duty on the premium is the same as for transfers of land (except that special rules apply for premium where rent exceeds £600 annually). Duty on the rent is charged on the Net Present Value (NPV). A per cent rate applies to the amount of NPV in excess of the threshold.

Rate	Net Present Value of rent
	Residential	Non-residential
	Slice of NPV
Zero	£0 - £125,000	£0 - £150,000
1%	Over £125,000	Over £150,000

The rate of stamp duty/stamp duty reserve tax on the transfer of shares and securities is unchanged at 0.5 per cent for 2007-08.

Vehicle excise duty for Private and Light Goods Vehicles

Pre-graduated VED (registered before March 2001)

£ per year	Change	New rate
1549cc and below	+£5	£115
above 1549cc	+£5	£180

Graduated VED for Private Vehicles (registered from March 2001)

£ per year VED band	CO ₂ (g/km)	Change	Alternative Fuel cars	Petrol cars	Diesel cars
A	100 and below	-	£0	£0	£0
B	101 to 120	-£15 / -£5 / -£15	£15	£35	£35
C	121 to 150	£5 / £15 / £5	£95	£115	£115
D	151 to 165	£5 / £15 / £5	£120	£140	£140
E	166 to 185	£5 / £15 / £5	£145	£165	£165
F	186 to 225	£10 / £15 / £10	£190	£205	£205
G*	226 and above	£85 / £90 / £85	£285	£300	£300

*for new cars registered from 23 March 2006

Vehicle excise duty for motorcycles

£ per year	Change	New rate
150cc and below	-	£15
151-400cc	+£1	£32
401-600cc	+£1	£47
above 600cc	+£2	£64

Changes to VED rates will take effect from 22 March 2007.

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Tax Rates & Allowances: 2007-8

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