Budget
March 2008:
Legislation is proposed as follows:
Business Tax
The Capital Allowance regime will be amended significantly for both
limited companies (1 April 2008) and traders from 6 April
2008. The main changes are:
1. An annual investment allowance (AIA) of up to £50,000
calculated on an April to April basis is available for claims
on qualifying expenditure. Expenditure over £50,000 will
attract writing down allowances. The 50% FYAs for small business
will no longer be available from April 2008.
2. The main rate for writing down allowances will reduce from
25% to 20% from April 2008. The old pool of expenditure
can be written off in total where it is less than £1,000.
3. Writing down allowances for certain expenditure integral to
a building (such as lifts/ thermal insulation/ heating systems
etc) will be restricted to 10%.
4. 100% FYAs will continue to be available for new low CO2 emission
cars of up to 110KG from April 08, for equipment fuelled
by biogas, and for plant and equipment purchased which is energy
efficient or water saving technology.
Corporation Tax
The small companies rate for companies is increased from 20% to 21%
from the financial year 2008/9 started 1 April 2008.
Value Added Tax
The VAT registration limit is increased from £64,000 to £67,000, and
the deregistration limit from £62,000 to £65,000 from 1 April 2008.
VAT errors can be amended on the next VAT Return without informing
HMRC if less than the greater of £10,000 or 1% of turnover (maximum
£50,000) from 1 July 2008.
Standard Rate - 17.5%
Lower Rate - 5%
Charities
Gift Aid reclaimable by Charities has reduced to 20% but HMRC will
supplement 'Gift Aid' by a further 2% for a transitional period.
Child and Working Tax Credits
| |
2008/9 |
2007/08 |
| Basic |
1,800 |
1,730 |
| Childcare element |
|
|
One child |
175 pw |
175 pw |
Two or more |
300 pw |
300 pw |
The first income threshold is £6,420 up to a maximum income
threshold of £50,000 for 2008/9. The first threshold for those entitled
to child tax credit only is £15,575.
Alcohol/Excise Duties etc
- Duty will increase on alcohol by 6% from 17 March 2008.
- Car tax will be progressively more expensive based on CO2 emissions.
New smaller, cheaper cars will generally be more tax efficient.
Employers
1. A written statement of the main terms of employment should
be provided within two months of the start of employment.
2. Paid holidays entitlement from October 2007 is 24 days
(part-time paid pro-rata).
3. Employment law requires employers to be fair and take necessary
procedures before making a dismissal.
Penalties
HMRC are reviewing the penalty regime for non-compliance by tax payers relating to income tax, CGT, CT, VAT ands PAYE and will be simplifying the time limits and penalties for all of these taxes.
Self Assessment 2007/8
You may be able to pay your tax bill by credit card from the Autumn
2008. The deadline for filing paper returns has changed to 31
October 2008 but the deadline for filing electronic tax returns
is 31 January 2009.
Please contact Yvonne or
Ian Sheppard if you would like to discuss in more detail these changes
for 2007/08 and whether you can benefit from tax and financial planning.
|
Current
Rates of UK Tax
| |
2008/09 |
2007/08 |
| Personal Allowance |
|
|
| General |
£ 5,435 |
£ 5,225 |
| aged 65 or over |
£ 9,030 |
£ 7,550 |
| aged 75 or over |
£ 9,180 |
£ 7,690 |
| age allowance income limit |
£21,800 |
£20,900 |
| MCA (10% relief) |
|
|
aged 75 or over |
£ 6,625 |
£ 6,365 |
or under |
£ 6,535 |
£ 6,285 |
| Income tax rates |
|
|
| Starting rate 10% |
* see below |
£ 2,230 |
Basic rate 20% (2007/8-22%) |
- up to |
£36,000 |
£34,600 |
| Higher rate 40% |
- over |
£36,000 |
£34,600 |
| |
| Capital Gains |
|
|
| Exempt |
£ 9,600 |
£ 9,200 |
| Inheritance tax threshold |
£312,000 |
£300,000 |
| Corporation tax |
|
|
Small companies (£0 - £300,000) |
21% |
20% |
| (£300,000 - £1,500,000) |
marginal relief |
marginal relief |
| (£1,500,001 or more) |
28% |
30% |
| National Insurance |
|
|
| Class 1 |
lower earnings limit |
£90 |
£87 |
| |
weekly earnings above |
£105 |
£100 |
| |
Employers |
12.8% |
12.8% |
| |
Employees |
11.0% |
11.0% |
| |
Employees above £770 pw (2007 - £670
pw) |
1.0% |
1.0% |
| |
|
|
| Class 2 |
self employed weekly |
£ 2.30 |
£ 2.20 |
Small earnings
exemption limit |
£ 4,825 |
£ 4,635 |
| Class 4 |
Rate |
8.0% |
8.0% |
| |
Band |
£5,435-
£40,040 |
£5,225-
£34,840 |
| Above £40,040 per year (£34,840-2007/8)
|
1.0% |
1.0% |
Savings
*The starting rate band for savings will be £2,320 for 2008/9 where
non-savings income does not exceed that amount. The cash ISA limit
will increase to £3,600 in a tax year from 6 April 2008.
National Insurance
The lower earning thresholds for NI have increased to £90 and £105.
The higher threshold band for class 4 NI and Employees class 1 is
increased from £34,840 to £40,040 from 6 April 2008 (an increase
of over £400 tax a year for self employed traders and high paid employees).
Inheritance Tax
Legislation will be introduced in the Finance Bill 2008 to allow any
IHT nil-rate band unused on a person's death to be transferred to
the estate of their spouse or civil partner who die on or after 9
October 2007. The NIL rate band is £312,000 for individuals or
a total of £624,000 for married couples and civil partners from 6
April 2008.
Non-Domicile Rules
Legislation will introduce the £30,000 charge for UK residents who are not UK domiciled. In addition, neither personal nor capital gains tax allowance will be available to non-domiciled individuals with unremitted UK income over £2,000 a year.
Capital Gains Tax
The taper relief regime will be abolished from 6 April 2008
and the first £1 million lifetime gain on a sale of a qualifying trading
business and certain business assets will be charged at 10%, with
gains in excess of £1 million and charged at 18%. Non-business chargeable
gains will be charged at the flat rate of 18%. The annual capital
gains tax exemption is increased to £9,600 per person for 2008/9.
National Minimum Wage
The minimum wage hourly rates for adults (over 22), youths (18-21)
and 16/17 year olds are as follows :-
| |
Oct 2007 |
Oct 2008 |
Adult |
5.52 |
5.73 |
Youth |
4.60 |
4.77 |
16/17 yr olds |
3.40 |
3.53 |
|