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Tax Rates + Allowances: 2008-9  

For 2007-8 rates, click here.

Income tax, capital gains tax, and inheritance tax

£ per year (unless stated) 2007-08 Change 2008-09
Income tax personal and age-related allowances
Personal allowance (age under 65) £5,225 +£210 £5,435
Married couple's allowance* - minimum amount £2,440 +£100 £2,540
Capital gains tax annual exempt amount
Individuals etc. £9,200 +£400 £9,600
Most trustees £4,600 +£200 £4,800
Individual inheritance tax allowance £300,000 +£12,000 £312,000
Pension schemes allowances
Annual Allowance £225,000 +£10,000 £235,000
Lifetime Allowance £1,600,000 +£50,000 £1,650,000

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

Income tax: taxable bands
2007-08 £ per year 2008-09 £ per year
Starting rate: 10% £0-£2,230 - -
Basic rate: 22% £2,231-£34,600 Basic rate: 20%* £0-£36,000
Higher rate: 40% Over £34,600 Higher rate: 40%* Over £36,000

*There will be a new 10% starting rate for savings income only, with a limit of £2320. If an individual’s taxable non-savings income is above this limit then the 10% savings rate will not be applicable. There are no changes to the 10% dividend ordinary rate or the 32.5% dividend upper rate.

Corporation tax on profits
£ per year (unless stated) 2007-08 2008-09
£0-£300,000 20% 21%
£300,001 - £1,500,000 Marginal relief Marginal relief
£1,500,001 or more 30% 28%

* It is worth noting that the Small Firms Tax Rate not only rises from 20% to 21% in April 2008, but also rises further - to 22% in April 2009!

National insurance contributions
£ per week (unless stated) 2007-08 Change 2008-09
Lower earnings limit, primary Class 1 £87 +£3 £90
Upper earnings limit, primary Class 1 £670 +£100 £770
Primary threshold £100 +£5 £105
Secondary threshold £100 +£5 £105
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 upper earnings limit 1% - 1%
Employers’ secondary Class 1 rate above secondary threshold 12.8% - 12.8%
Employers’ contracted-out rebate, salary-related schemes 3.7% - 3.7%
Employers’ contracted-out rebate, money-purchase schemes 1.4% - 1.4%
Class 2 rate £2.20 +£0.10 £2.30
Class 2 small earnings exception (per year) £4,635 +£190 £4,825
· Special Class 2 rate for share fishermen £2.85 +0.10 £2.95
Special Class 2 rate for volunteer development workers £4.35 +£0.15 £4.50
Class 3 rate (per week) £7.80 £0.30 £8.10
Class 4 lower profits limit (per year) +£5,225 +£210 £5,435
Class 4 upper profits limit (per year) £34,840 +£5,200 £40,040
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 2007-08 Change 2008-09
Eldest/Only Child £18.10 +£0.70 £18.80
Other Children £12.10 +£0.45 £12.55
Guardian’s Allowance £12.95 +£0.50 £13.45


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 non-residential land and property premium where rent exceeds £1,000 annually. The rules no longer apply to residential property from 12 March 2008). Duty on the rent is charged on any part of the net present value (NPV) which exceeds the threshold.

Rate Net Present Value of rent
Residential in disadvantaged areas Residential outside disadvantaged areas Non-residential

Slice of NPV
Zero £0 - £150,000 £0 - £125,000 £0 - £150,000
1% Over £150,000 Over £125,000 Over £150,000


Transfers of shares and stocks

The rate of stamp duty/stamp duty reserve tax on the transfer of shares and securities is unchanged at 0.5 per cent for 2008-09.

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 £120
above 1549cc +£5 £185


Graduated VED for Private Vehicles (registered from March 2001)
£ per year
VED band 		CO2 (g/km) Change Alternative Fuel cars Petrol and Diesel cars
A 100 and below - £0 £0
B 101 to 120 - £15 £35
C 121 to 150 +£5 £100 £120
D 151 to 165 +£5 £125 £145
E 166 to 185 +£5 £150 £170
F 186 to 225 +£5 £195 £210
G* 226 and above +£100 £385 £400

*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 £33
401-600cc +£1 £48
above 600cc +£2 £66

Changes to VED rates will take effect from 13 March 2008.


Published on Mar 25, 2008


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