TAX FACTS 2004/2005

Income Tax Rates

Rate on taxable income
Band, £ (GBP)
Rate,%
Starting rate (SR) on first 1-2,020 10
Basic rate (BR) on next 2,020-29,380 22
High rate (HR) on next Over 31,400 40
 
Dividends and interest-treated as top and next-to-top slices of income respectively. Tax credit (TC)=1/9x divident
Income falling in
SR band
BR band
HR band
Dividends (+TC) 10% 10% 32,5%
Interest (gross) 10% 20% 40%

Allowances and Reliefs

 
£ (GBP)
Personal allowance
4,745
Married couple's allowance
nil
Additional personal allowance
nil
Children's Tax Credit
nil
Children's Tax Credit - baby rate
nil
Age allowance
Single person
aged 65-74
6,830
aged 75 and over
6,950
Married couple's allowance
aged 65-74
5,725*
aged 75 and over
5,795*
Age allowance reduced by 1/2
of income over
18,900
Blind person's allowance
1,560
 
*Relief restricted to 10%
**Relief restricted to 10% and reduced for higher rate taxpayers

Corporation Tax

Year to 31 March
Taxable profit
£ (GBP)1-£ (GBP)10,000
0%
£ (GBP)10,001-£ (GBP)50,000*
23,75%
£ (GBP)50,001-£ (GBP)300,000
19%
£ (GBP)300,001-£ (GBP)1,500,000**
32,75%
Over £ (GBP)1,500,001
30%
 
*Marginal relief fraction
19/400
**Marginal relief fraction
11/400

Capital Allowances

Plant and machinery; patents; know-how
Writing-down Allowance
Generally (car maximum £ (GBP)3,000 pa)
25%
Certain - Long Life assets
6%
 
First year/Initial Allowance
- small businesses
50%
- medium businesses
40%
- small businesses on information technology
50%
- any businesses on energy-saving plant
100%
Industrial and agricultural buildings
  
Writing-down Allowance
4%
Commercial buildings in Enterprise Zones
  
Initial Allowance
100%

Capital Gains Tax

 
£ (GBP)
Annual exemption (AE)
- individuals
8,200
- trustees
4,100
Gains in excess of AE taxed as if additional income
- individuals
 
- up to SR limit
10%
- between SR limit and HR threshold
20%
- above HR threshold
40%
- trustees
40%
Chattels exemption
6,000
Indexation allowance was frozen at 05.04.98 for individuals
Number of complete years after 5.04.98 for which asset held Business assets chargeable for disposals Business assets equivalent tax rate for higher rate taxpayer Non business assets chargeable for disposals
  % % %
0 100 40 100
1 50 20 100
2 25 10 100
3 25 10 95
4 25 10 90
5 25 10 85
6 25 10 80
7 25 10 75
8 25 10 70
9 25 10 65
10 or more 25 10 60
With effect from 06.04.2004 commercial property let to sole traders or trading partnerships may qualify for business taper

Company Car Scale Charges

For 2004/2005 the company car scale charge are:
-15% of the list price if emissions< 145g/km
-1% increase per additional emissions of 5g/km
-maximum benefit is 35% of list price where emissions > 245g/km
-for diesel engines add 3% unless engine meets EuroIV emissions standard (max benefits is 35%)
 
Fuel benefit
The fuel benefit charge is based on the car's CO2 emission rate
-£ (GBP)2,160 if emissions <145g/km
-£ (GBP)144 increase per additional emissions of 5g/km
-maximum benefit is £ (GBP)5,040 for >245g/km
-for diesel engines supplements apply (max benefit is £ (GBP)5,040)
 
Employers are liable for Class 1A NICs on these charges which apply to emloyees earning £ (GBP)8,500 pa and most directors.
 
Use of vans:
- £ (GBP)500
- over four years old £ (GBP)350

Inland Revenue Mileage Rates

Approved Inland Revenue tax-free mileage rates
Mileage For 2003/2004
Up to 10,000 miles 40p
Over 10,000 miles 25p

Employment Benefits

Applies to most directors and all employees earning at a rate of £ (GBP)8,500 p.a. or more.
Beneficial loans
Official rate of interest for 2003/2004 - 5%.
Use of assets
Benefit is 20% of market value or cost to employer (if greater) plus relevant expenses. Special rules for property.

Individual Savings Accounts

No tax on interest, dividens or capital gains
Maximum annual investment
Ј(GBP
Mini - Cash
up to 3,000
- Life insurance
up to 1,000
- Stocks and shares
up to 3,000
Maxi - Cash
up to 3,000
- Life insurance
up to 1,000
- Stocks and share
balance to 7,000

Charity Taxation

There is no minimum amount for a Gift Aid donation and all cash donations, of whatever size, made by a UK taxpayer are eligible for Gift Aid relief.

Tax relief is available to individuals and companies for gifts of real property shares and securities to charities. Higher rate taxpayers can carry back their gift aid payment to the previous year.

Individuals will be able, from 2003/04, to nominate a charity on their tax return to receive any refunnd they are due to receive.
 

VAT

From 1.4.2004
Standard Rate
17.5%
Fuel and Power Rate
5%
Installation of energy saving material
5%
VAT on fraction of gross price
7/47
Certain housing refurbishment work
5%
Annual Turnover Limits* (based on previous 12 months)  
Registration
£ (GBP)   58,000
Deregistration
£ (GBP)   56,000

Inland Revenue Interest Rates

Income Tax/Capital Gains Tax
- late paid tax
6.5%
- over paid tax
2.5%
Corporation tax - periods ended pre 1.7.99
- late paid tax
5%
- over paid tax
2%
Corporation tax - periods ended pre 30.6.99
- late paid tax
6.5%
- over paid tax
3%
Corporation Tax quarterly instalment payments
- under paid instalments
5%
- over paid instalments
3.75%
Inheritance Tax
3%
VAT 
- on under declaration
6.5%
- on official errors
3%
These rates are effective from 16 February 2004

National Insurance Contributions

Class 1 Employment:
Lower earnings limit:
pw
£ (GBP)79
 
pa
£ (GBP)4,108
Upper earnings limit:
pw
£ (GBP)610
 
pa
£ (GBP)31,720
Primary threshold (employee):
pw
£ (GBP)91
 
pa
£ (GBP)4,745
Secondary threshold (employer):
pw
£ (GBP)91
 
pa
£ (GBP)4,745
 
Employee's contributions 11%:
-on weekly earnings between £ (GBP)91 - £ (GBP)610
-1% on weekly earnings above £ (GBP)610
 
Employee's contracted-out rebate 1.6%
 
Married woman's reduce rate 4.85%:
-on weekly earnings between £ (GBP)91 - £ (GBP)610
-1% on weekly earnings above £ (GBP)610
 
Employer's contributions 12.8%:
-on weekly earnings over £ (GBP)91
 
Employer's contracted-out rebate:
-salary related 3.5%
-money purchase 1%
 
Classes 1A+ 1B Employer:
12,8% on (A) Car, car fuel and other taxable benefits
12,8% on (B) PAYE settlement agreements
 
Class 2 Self-employed:
Weekly rate £ (GBP)2.05 once earnings over £ (GBP)4,215 p.a.
 
Class 3 Voluntary:
Weekly rate £ (GBP)7.15
 
Class 4 Self-emloyed:
8% on annual profits between £ (GBP)4,745 - £ (GBP)31,720
1% on annual profits above £ (GBP)31,720

National Minimum Wage

 
From October 2004
Workers
per hour
22 years +
£ (GBP)4.85
18-21 years
£ (GBP)4.10
16-17 years
£ (GBP)3

Personal Pensions

  Contribution limit - 0% of net relevant earnings
Age on 6 April 2004 PPS RAP*
Under 36 17.5 17.5
36-45 20.0 17.5
46-50 25.0 17.5
51-55 30.0 20.0
56-60 35.0 22.5
61 and over 40.0 27.5
N.R.E. cap for P.P.S. 2003/04: £ (GBP)99,000
2004/05: £ (GBP)102,000
*Retirement annuity policy limits apply to policies effected before 1 July 1988.
Stakeholder pensions allow individuals to contribute up to £ (GBP)3,600 per annum irrespective of earnings or age.

Stamp Duty

Shares and Securities   0,5%
Transfers of property, Stamp Duty Land Tax
Value of property, Residential and Non-residential Rate
£ (GBP) %
1-60,000 nil
60,001-250,000 1
250,001-500,000 3
Over 500,000 4
There is a stamp duty exemption for certain residental property purhases in "disadvantaged" areas for consideration up to £ (GBP) 150,000
There is a stamp duty exemption for all non-residental property purhases in "disadvantaged" areas.
Stamp Duty Land Tax on New Leases
Residential Non-residential Rate of charge on net present value of rent
£ (GBP) £ (GBP) %
0-60,000 0-150,000 0
over 60,000 over 150,000 1
 
 

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