|
Tax Rates
Income Tax
| |
2004/05 |
2003/04 |
| Starting rate band to |
£2,020 |
£1,960 |
| Tax rate |
10% |
10% |
| Basic rate on - next |
£29,380 |
£28,450 |
| Non-savings income tax rate |
22% |
22% |
| Savings income tax rate |
20% |
20% |
| UK dividend income tax rate |
10% |
10% |
| Higher rate – income over |
£31,400 |
£30,500 |
| Higher tax rate |
40% |
40% |
| UK dividend income tax rate |
32.50% |
32.50% |
| Trusts - tax rate |
40% |
34% |
| UK dividend rate |
32.50% |
25% |
| |
|
|
| Allowances that Reduce Taxable Income |
| Personal allowance (PA) - under 65 |
£4,745 |
£4,615 |
| 65 to 74 |
£6,830 |
£6,610 |
| 75 and over |
£6,950 |
£6,720 |
| |
|
|
| Allowances that Reduce Tax |
| Married couple's allowance (MCA) |
|
|
| Tax reduction – 69 to 74 |
£572.50 |
£556.50 |
| 75 and over |
£579.50 |
£563.50 |
| |
|
|
| Tax Shelters |
| Enterprise Investment Scheme (EIS) up to |
£200,000 |
£150,000 |
| Venture Capital Trust (VCT) up to |
£200,000 |
£100,000 |
| |
|
|
| “Rent a Room” exempt on gross annual rent |
£4,250 |
£4,250 |
| |
|
|
| Construction Industry Scheme deduction rate |
18% |
18% |
| |
|
|
| Ages are at the end of the tax year. Ages for
MCA relate to the elder spouse. The age-related allowances
are progressively withdrawn for income exceeding £18,900
(2003/04 £18,300), reducing first PA and then MCA (for
MCA the husband's income only is considered). PA cannot fall
below £4,745 (2003/04 £4,615) and MCA tax reduction
cannot fall below £221 (2003/04 £215). |
Savings
| Pensions Qualifying contributions up to £3,600
(before basic rate tax relief at source) may be made to personal
pension schemes, including Stakeholder schemes. Contributions
above this level may be made, subject to the limits below: |
| |
Overall % Limit of
Net Relevant Earnings |
| Age at 6 April 2003 |
Personal
Pensions |
Retirement Annuities |
| 35 or under |
17.5 |
17.5 |
| 36 - 45 |
20 |
17.5 |
| 46 - 50 |
25 |
17.5 |
| 51 - 55 |
30 |
20 |
| 56 - 60 |
35 |
22.5 |
| 61 - 74 |
40 |
27.5 |
| Subject to maximum earnings of |
£102,000 |
No Limit |
| |
|
|
| ISAs - Overall Investment Limit |
£7,000 |
|
Corporation Tax
| Financial Year to |
31-Mar-04 |
31-Mar-04 |
| Taxable Profits * |
|
|
| |
|
|
| First £10,000 |
0% |
0% |
| Next £40,000 |
23.75% |
23.75% |
| Next £250,000 |
19% |
19% |
| Next £1,200,000 |
32.75% |
32.75% |
| Over £1,500,000 |
30% |
30% |
| |
|
|
| * For 2004-05 profits distributed to individuals
- minmum 19% |
Main Capital Allowances
| Motor cars |
25% |
Max £3,000 per car |
| Plant and machinery first year allowance |
50% |
Small firms |
| |
40% |
Medium firms |
| writing down allowance |
25% |
On reducing balance |
| IT (small firms) and energy saving |
100% |
First year allowance |
| Industrial and agricultural buildings |
4% |
Of building cost |
Value Added Tax
| From |
01-Apr-04 |
10-Apr-03 |
| Standard rate |
17.50% |
17.50% |
| VAT Fraction |
7/47 |
7/47 |
| |
|
|
| Taxable Turnover Limits: |
| Registration limit - last 12 months or next 30 days over |
£58,000 |
£56,000 |
| Deregistration - next year under |
£56,000 |
£54,000 |
| Cash Accounting Scheme |
£660,000 |
£600,000 |
| Flat Rate Scheme |
£150,000 |
£100,000 |
National Insurance
| Class 1 (not contracted out) |
Employer |
Employee |
| Payable on weekly earnings of |
|
|
| |
|
|
| £89.01 - £595 |
12.80% |
11% |
| Over £595 |
12.80% |
1% |
| Over retirement age |
as above |
Nil |
| Class 1A On relevant benefits |
12.80% |
Nil |
| Class 2 Self
employed |
£2.05 per week |
|
| Limit of net earnings exception |
£4,215 per annum
|
|
| Class 3 Voluntary |
£7.15 per week |
|
| Class 4* Self employed on
profits |
|
|
| £4,615 - £30,940 |
8% |
|
| Excess over £30,940 |
1% |
|
| |
|
|
| * Exemption applies if state retirement age
was reached by 6 April 2004 |
Capital Gains Tax
| |
2004/05 |
2003/04 |
| Taxed as top slice of savings income |
|
|
| Annual exemption |
- individual |
£8,200 |
£7,900 |
| |
- settlement |
£4,100 |
£3,950 |
| |
| Transfers between husband and wife living together
are exempt. |
| |
|
|
| Taper relief 2003-04 disposals |
Years |
Relief |
| business assets |
0 - 2 |
0 - 75% |
| non business assets |
0 - 10 |
0 - 40% |
| |
|
|
| Apportionment may apply where asset has not
been a business asset throughout the entire period of ownership |
Inheritance Tax
| |
2004/05 |
2003/04 |
| Nil rate band |
263000 |
255000 |
| Rate of tax on balance: |
|
|
| Chargeable lifetime transfers |
20% |
20% |
| Transfers on, or within 7 years of death |
40% |
40% |
| |
|
|
| All lifetime transfers not covered by exemptions
and made within seven years of death will be added back
into the estate for the purpose of calculating the tax
payable. This may the be reduced by: |
| |
| Years before death |
0-3 |
3-4 |
4-5 |
5-6 |
6-7 |
| Tax reduced by |
0% |
20% |
40% |
60% |
80% |
|
Main Exemptions
- Most transfers between husband and wife
- The first £3,000
of lifetime transfers in a tax year (husband and wife
each have own exemption)
- Gifts of up to but not exceeding £250p.a.
to any number of persons
- Gifts made out of income that form normal expenditure
and do not reduce the standard of living
- Gifts in consideration
of marriage to bride and/or groom of up to £5,000
by a parent, £2,500 by a grandparent, or £1,000 by any other
person
- Gifts to charities, whether made during lifetime
or on death
|
Stamp Duty
| Stamp duty is payable at a rate of 0.5%
on transfers of shares and securities. On the transfer
of residential property the duty is: |
| Value up to £60,000 (£150,000
for property in disadvantaged areas) |
zero |
| Value £60,001 - £250,000 |
1% |
| Value £250,001 - £500,000 |
2% |
| Value over £500,000 |
4% |
| |
Vehicles
Petrol and Diesel Car Benefits System
The taxable benefit is calculated as a percentage
of the car’s list price. The calculation
begins with the car’s CO2 emissions in grams
per kilometre. Then deduct 145 and divide the
result by 5. Round down (4.9=4) and then add
15 (petrol) or 18 (diesel). The result is the
taxable percentage. Normal minimum rates are
petrol 15%, diesel 18% and the maximum rate for petrol
and diesel is 35%. Special rules apply to very
low emission diesel and alternative fuel cars.
Information
regarding the emissions for most modern vehicles
is available from www.smmt.co.uk/co2/co2search.cfm
Reliable
emissions data is not widely available for cars first
registered before 1 January 1998. For
them, the taxable percentage figures are:
|
| Up to 1400cc |
15% |
| 1401 – 2000cc |
22% |
| Over 2000cc |
32% |
| |
- The list price relates to the
day before first registration and includes accessories.
The price is subject to an upper limit of £80,000.
- The
list price is reduced by the employee's capital
contribution when the car is first made available,
subject to a maximum deduction of £5000
- Payments
by employees for private use may reduce the above
benefits.
Inland Revenue Mileage Rates Car: Approved
rates for employees using their own cars for business
are 40p per mile for the first 10,000 miles and 25p
per
mile thereafter. Income
tax and NICs may be due on higher rates and tax relief on lower rates.
Fuel: Advisory rates for employee private mileage reimbursement or employer
reimbursement of business mileage are: |
| |
Petrol |
Diesel |
LPG
|
| Up to 1400cc |
10p |
9p |
6p |
| 1401 – 2000cc |
12p |
9p |
7p |
| Over 2000cc |
14p |
12p |
9p |
|
| |
|
|
Car fuel benefit
Where
the cost of all fuel for private use is borne by
the employee, the fuel benefit is nil. Otherwise,
the taxable benefit is calculated as the car benefit
percentage (see above) of £14,400 and VAT becomes
payable as follows:
|
| VAT due per quarter per car |
Petrol |
Diesel |
| Up to 1400cc |
£34.55 |
£32.17 |
| 1401 – 2000cc |
£43.63 |
£32.17 |
| Over 2000cc |
£64.34 |
£40.65 |
|
|
|
|
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