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Tax Tables

 


Income tax

 
2005-06
2004-05
Starting rate band to
£2,090
£2,020
  Tax rate
10%
10%
Basic rate band – next
£30,310
£29,380
  Non-savings income tax rate
22%
22%
  Savings income tax rate
20%
20%
  UK dividend income tax rate
10%
10%
Higher rate – income over
£32,400
£31,400
  Normal tax rate
40%
40%
  UK dividend income tax rate
32.5%
32.5%

 

Allowances that reduce taxable income
(ages are as at end of the tax year)
 
2005-06
2004-05
Personal allowance (PA)
 
 
  – under 65
£4,895
£4,745
  – 65 to 74
£7,090
£6,830
  – 75 and over
£7,220
£6,950

 

Allowances that reduce tax payable
 
2005-06
2004-05
 
reduction in tax up to
Married Couple's Allowance (MCA)
 
 
  – either spouse over 65
£228
£221
     
Higher allowance
 
 
  – up to 74
£590.50
£572.50
  – 75 and over
£597.50
£579.50
     
The higher allowances are progressively withdrawn if income exceeds
£19,500
 

 

Tax shelters
 
2005-06
2004-05
Enterprise investment schemes
£200,000 
£150,000 
 
 
 
Venture Capital Trust
£200,000
£100,000
     
'Rent a room' exempt on gross annual rent
£4,250
£4,250
     
Construction Industry Scheme deduction rate
18% 
18% 


Pensions & Savings

Pensions
 
Overall % limit of net relevant earnings
Age at 6 April 2005
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 max. earnings
£105,600
No limit

 

Qualifying contributions of 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 above.

ISAs
Overall investment limit
 
£7,000
Including cash maximum of
 
£3,000


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 140 and divide this result by 5. Round down (4.9 = 4) and then add 15 (petrol) or 18 (diesel). This result is the taxable percentage.
 
Petrol
Diesel
Minimum rate*
15% 
18%
Maximum rate
35% 
35%
*Special rules apply to alternative fuel cars and very low emission diesel cars registered before 1 January 2006.

Reliable emissions data is not widely available for cars first registered before January 1998. For them the taxable percentage figures are:

Up to 1400cc
 
15%
1401 - 2000cc
 
22%
Over 2000cc
 
32%

 

Chargeable on employees earning £8,500 or over (including benefits) and directors.

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 £5,000.

Special rules apply to cars at least 15 years old with a market value of £15,000 or more.

Van under 4 years at the end of the tax year, benefit £500, 4 years or over £350 per vehicle, which includes fuel for private use until 6 April 2007. Benefit increases to £3,000 from 6 April 2007.

Payments by employees for private use may reduce the above benefits.

 

Car fuel benefit

Where the cost of all fuel 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
 
Scale charge
VAT due
 
Petrol
Diesel
Petrol
Diesel
Up to 1400 cc
£246
£236
£36.64
£35.15
1401 – 2000 cc
£311
£236
£46.32
£35.15
Over 2000 cc
£457
£300
£68.06
£44.68

 



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: From 1 July 2005 advisory rates for employee private mileage reimbursement or employer reimbursement of business mileage are:

 

 
 
Petrol
Diesel
LPG
Up to 1400 cc
10p
9p
6p
1401 – 2000 cc
12p
9p
7p
Over 2000 cc
16p
13p
10p

 



Corporation tax

 

Corporation tax
Financial year to
31 March 2006
31 March 2005
Taxable profits        
First £10,000 0% £10,000 0%
Next £40,000 23.75% £40,000 23.75%
Next £250,000 19% £250,000 19%
Next £1,200,000 32.75% £1,200,000 32.75%
Over £1,500,000 30% £1,500,000 30%

 



Main capital allowances

Main capital allowances
Motor cars 25% Max £3,000 p.a. per car
Plant and machinery    
  first year allowance 40% Small & medium firms
  writing down allowance 25% On reducing balance
Industrial and agricultural buildings 4% Of building cost

 



Value Added tax

Value Added tax
From 1 April 2005 1 April 2004
Standard rate VAT 17.5% 17.5%
VAT fraction 7/47 7/47
Taxable turnover limits    
Registration    
  – last 12 months or coming
  30 days over
£60,000 £58,000
Deregistration    
  – coming year under £58,000 £56,000
Cash Accounting Scheme £660,000 £660,000
Flat Rate Scheme £150,000 £150,000
Note: Optional flat rate scheme for small businesses available from 25 April 2002.

 



National Insurance contributions

 

National Insurance contributions
Class 1 (not contracted out) Employer Employee
Lower earnings limit   £91
Payable on weekly earnings of    
£94.01 – £630 12.8% 11%
Over £630 12.8% 1%
Men 65 and over and women 60 and over as above Nil
Class 1A On relevant benefits 12.8% Nil
Class 2 Self-employed
£2.10 per week
  Limit of net earnings for exception
£4,345 per annum
Class 3 Voluntary
£7.35 per week
Class 4* Self-employed on profits    
  £4,895 - £32,760
8%
  Excess over £32,760
1%
*Exemption applies if state retirement age is reached by 6 April 2005.


Capital Gains tax

Capital Gains tax
  2005-06 2004-05
Taxed as top slice of savings income Up to 40% Up to 40%
Annual exemption    
  – individual £8,500 £8,200
  – settlement £4,250 £4,100
Transfers between husband and wife living together are exempt.

 

Taper relief 2004-05 disposals
Years 1 2 3 4 5 6 7 8 9 10
Business assets — % relief 50 75 75 75 75 75 75 75 75 75
Non-business assets — % relief 0 0 5 10 15 20 25 30 35 40
Apportionment may apply where asset has not been a business asset throughout the entire period of ownership. *Add one year for non-business assets acquired before 17 March 1998.

 



Inheritance tax

Inheritance tax
  2005-06 2004-05
Nil rate band £275,000 £263,000
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 will then be reduced:

 

Tax relief for gifts within 7 years of death
Years before death 0 - 3 3 - 4 4 - 5 5 - 6 6 - 7
Tax on gift reduced by 0% 20% 40% 60% 80%

 

Main exemptions

Most transfers between husband and wife • The first £3,000 of lifetime transfers in any tax year (husband and wife each have own exemption) • Gifts of up to, but not exceeding, £250 p.a. to any number of persons • Gifts made out of income that form part of normal expenditure and do not reduce the standard of living • Gifts in consideration of marriage to bride and/or groom as follows: 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 taxes

Stamp duty is payable at a rate of 0.5% on transfers of shares and securities. On the transfers of other property, the rate is:

 

Value up to £120,000* zero
Value £120,001 - £250,000 1%
Value £250,001 - £500,000 3%
Value over £500,000 4%
* 150,000 for property in qualifying areas

 



Some useful rates

Some useful rates
 
2005-06
2004-05
 
£
£
Basic retirement pension
  – Single person
82.05
77.45
  – Married couple
131.20
127.25
Child benefit
  – First eligible child
17.00
16.50
  – Each subsequent child
11.40
11.05
Statutory Sick Pay (SSP)
  Standard rate (average weekly pay over £77)
68.20
66.15
Statutory Maternity Pay (SMP)
  90% of average weekly pay
First 6 weeks
  Max. £106 Min. 90% average weekly Pay
Next 20 weeks
  Minimum rate
73.80
Adoption (SAP)
26 weeks
Paternity (SPP)
one week or fortnight
  SAP/SPP – 90% of avarage weekly pay Max. £100 Min. £73.80
Example rates:
Jobseekers Allowance
  – Single person – up to
56.20
 
  – Married couple
88.15
 
National minimum wage
  From October 2005 – over 21
£5.05 ph
 
  From October 2005 – 18-21
£4.25 ph
 
  From October 2005 – 16 & 17
£3.00 ph
 

 



Key dates and deadlines

Key dates and deadlines
   
2005-06
2004-05
Income tax and Class 4 NIC
1st payment on account 31 January
2006
2005
2nd payment on account 31 July
2006
2005
Balancing payment 31 January
2007
2006
Capital Gains tax 31 January
2007
2006
Corporation tax
9 months after the end of accounting period
2004/05 returns filing/issuing deadlines
19 May 2005
P14, P35, P38, P38A and CIS36
31 May 2005
Issue P60s to employees
6 July 2005
P9D and P11D and P11Db – and appropriate copies to employees
31 January 2006
Self-assessment tax return
2004/05 Class 1A NICs on relevant benefits
19 July 2005 Payment due

 



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