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News

Each quarter, we publish a newsletter and annually a budget summary for our clients
detailing the latest tax and business information relevant to the small business.

You can download the latest of these here in PDF Format.

Newsletter Newsletter Budget 2008 Budget 2008

If you use our Weekly Till Sheets or Mileage Log Sheets you can download them here

Weekly Till SheetWeekly Till Sheet Mileage Log Mileage Log Sheet

 

To view this document you will need Adobe Acrobat Reader installed on your system - if you do not have it already it can be downloaded FREE by clicking on the button to the right.


Information

income tax rates | main income tax reliefs | tax credits | car benefit assessment | tax free mileage rates |individual savings accounts (ISA's) | national insurance contributions | personal pensions | rates of inheritance tax | capital gains tax | tapering chargeable gains | corporation tax | main capital allowances | value added tax | vat scale rates on private fuel | vat flat rate scheme | stamp duty | pensions and benefits | national minimum wage | earliest due date to payment of tax


 INCOME TAX RATES
2007/2008 2006/2007
Starting rate - 10% £0 - 2230 £0 - 2,150
Basic rate - 22% £2,231 - 34,600 £2,151 - 33,300
Highest rate - 40% over £34,600 over £33,300

Savings income rate - 10% for income within the starting rate band, 20% for income within the basic rate band and 40% above that. Dividends - 10% for income below the basic rate limit and at 32.5% above that.


MAIN INCOME TAX RELIEFS
2007/2008 2006/2007
Single person £5,035 £5,035

Age Allowance
Single person
- Age 65-74*
- Age 75 or over*

Married Couple
- Age 65-74*+
- Age 75 or over*+

Income Limit

 



£7,550

£7,690


£6,285
£6,365

£20,900



£7,280
£7,420


£6,065
£6,135

£20,100

Blind person's allowance £1,730 £1,660
Maintenance payments* (born before 5/4/35) £2,350 £2,350

+ only available if born before 6 April 1935
+ Age Allowances are reduced £1 for every £2 by which income exceeds the income limit, until the age allowance is reduced to the normal allowance. Personal allowance is reduced before married couple's allowance. MCA is reduced to a minimum of £2,440 (2006/07: £2,350.

 

IMPORTANT LIMITS
2007/2008 2006/2007
Charitable donations under payroll giving scheme no limit no limit
Golden handshake exemption £30,000 £30,000
Venture capital trusts** £200,000 £200,000
Gift aid - minimum no minimum no minimum
Rent a room exemption £4,250 £4,250
Enterprise Investment scheme* £400,000 £400,000

*Relief restricted to 20%
** Relief restricted to 30% - must now be held for 5 years

 

WORKING TAX CREDIT (WTC) 2007/08
BASIC ELEMENT
LONE PARENT ELEMENT
2nd ADULT ELEMENT
30 HOUR ELEMENT
DISABILITY ELEMENT
SEVERE DISABILITY ELEMENT
50 PLUS ELEMENT
CHILDCARE ELEMENT
16 to less than 30hrs work pw
Over 30 hrs work pw
80%of cost
Max / Max 1 Child
£1,730pa
£32.27 pw
£1,700pa
£32.69pw
£1,700pa
£32.69pw
£705pa
£13.56pw
£2,310pa
£44.42pw
£980pa
£18.85pw
1,185pa
£22.79pw
£1,770pa
£34.04pw
£300pw / £175pw

 

CHILDRENS TAX CREDIT (CTC) 2007/08
FAMILY ELEMENT
BABY ADDITION (under 1 year)
CHILD ELEMENT
DISABELED CHILD ELEMENT
ENHANCED DISABLED CHILD ELEMENT
£545pa
£10.45 pw
£545pa
£10.450pw
£1,845pa
£35.48pw
£2,440pa
£46.92pw
£980pa
£18.85pw

 

HOW WTC/CTC IS CALCULATED
Those entitled to CTC only: income less than £14,495 pa or £278.75pw - full CTC.
Those entitled to WTC & CTC income less than £5,220pa or £100.38pw - full WTC & CTC
Tax Credits reduced by 37p for every £1 over the threshold.
Family Element of CTC retained until income over £50,000pa then tapers at £1 for each £15 .

No Capital limits
First £25,000 income disregarded (£2,500 to 05/04/2005)

 

PENSION CREDIT
The figures to be used in calculating Pension Credit entitlements are
2007/08
2006/07

Standard minimum guarantee
- single person
- couple
- each additional spouse in a polygamous marriage

Additional amount for severe disability
- single person
- couple (one qualifies)

- couple (both qualify)

Additional amount for carers



£119.05
£181.70

£62,65


£48.45
£48.45
£96.90

£27.15



£114.05
£174.05

£60.00


£46.75
£46.75
£93.90

£26.35

Savings credit - single person
- threshold
- maximum


£87.30
£19.05
£84.25
£17.88

Savings credit - couple
- threshold
- maximum

£139.60
£25.26
£134.75
£25.38

Disregards
Standard earnings
Couple's earnings
Higher Earnings
(carers, part-time fireman etc)
War disablement pension
War widow'spension
Armed Forces Compensation Scheme
Widowed parent's allowance
Income from a subtenant+


£5.00
£10.00
£20.00

£10.00
£10.00
£10.00
£10.00
£20.00

£5.00
£10.00
£20.00

£10.00
£10.00
£10.00
£10.00
£20.00
Deductions from awards
Recovery of overpaid Pension Credit
- ordinary overpayments
- claimant convicted of fraud
Recovery of Council Tax, housing, fuel
and water costs


£9.00
£12.00

£3.00


£8.70
£11.60

£2.90

Income from investments
The capital disregard remains £6,000 (£10,000 for claimants living permanently in a care home). The deemed weekly income from capital in excess of the disregard remains £1 for each £500 or part thereof.

+For income from a boarder, the disregard is £20 plus half the balance of the amount paid by the boarder

 

 



CAR BENEFITS 2007/08 - CARS WITH C02 EMISSION FIGURE*
Grams per litre
140
145 150 155 160 165 170 175 180 185 190 195 200 205 210 215 220 225 230 235
240
% of Car's price taxed
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
DIESEL SUPPLEMENTS: Add 3% up to 224 grams, 2% for 234 grams, 1% for 239 grams and no supplement at 240 grams. VANS:up to 3500 kilos - under 4 years old £500, Over 4 years old £350.
* CO2 omission figures can be located at www.smmt.co.uk/co2

 

You can find your vehicle CO2 emission fiqure at
SMMT - CO2 Emission Service

CARS WITH NO CO2 EMISSION FIGURE & CARS 1ST REGISTERED BEFORE 1/1/98

Registered before 1st January 1998
% rate
1400cc or less

15
1401cc -2000cc

22
2001cc and more

32
Rotary engine

32
Registered after 1st January 1998
% rate
15 (Diesel + 3%)
25 (Diesel + 3%)
35
35

 

CAR BENEFITS - CARS THAT RUN ON ALTERNATIVE FUELS & TECHNOLOGIES
Type of Car
Battery Electric Cars
Hybrid electric cars
Cars using liquid petroleum gas (LPG) or compressed natural gas (CNG)
Bi-fuel cars (both gas & petrol)
Discounted charge
15% of list price less 6% discount
Normal % of list price less 2% discount and further 1% discount for each full 20 g/km that CO2 figure is below level of minimum charge for the year
Normal % of list price less 1% discount and a further 1% discount for each full 20g/km that CO2 figure is below level of minimum charge for year
Registered before 1st Jan 2000 normal% less 1%. Registered after 1st Jan 2000 as per LPG cars

From 06/04/2006
Discounts

6%
3%
2%
2% manufactured or converted before type approval

CAR FUEL BENEFIT

Based on CO2 emissions. Charge to be multiplied by a set figure for the year.
For 2007/08 set figure is £14,400
Example: A car that has a CO2 of 195 g/km. % used to calculate car benefit is 26%.
The fuel scale charge will be 26% x £14,400 = £3,744.
Cars registered before 1/1/98 and cars with no CO2 emissions figure. % figure to be used is the same as used for Car Benefits.



TAX FREE MILEAGE RATES - OWN CARS/VANS
Miles 2007/08 2006/07
up to 10,000 miles 40p 40p
over 10,000 miles 25p 25p

For each additional passenger 5p. Motor Cycles 24p. Bicycles 20p.

ADVISORY ONLY - TAX FREE MILEAGE RATES 2007/08 - COMPANY CARS*

Cylinder Capacity
Petrol
Diesel
LPG
0 - 1400cc
11p
11p
7p
1401 - 2000cc
13p
11p
8p
2001cc +
19p
14p
10p

 


INDIVIDUAL SAVINGS ACCOUNTS (ISA's)

Individuals 18 or over, Maximum Investment of £7,000pa of which there is a maximum of £3,000 for a "cash ISA" and £1,000 for a "life insurance ISA"

Individuals 16-17 can invest up to £3,000pa in either the cash element of a maxi-ISA or in a cash mini-ISA

Income from this type of investment is free of any Income tax or Capital Gains Tax.


NATIONAL INSURANCE CONTRIBUTIONS 2007/2008
Class 1 - Employed
 
Employee's Contribution
Employer's Contribution
Earnings in range
Contribution Table A
Contribution Table B
Contribution Table C
Tables A,B and C
Up to £87pw (£377pm)
Nil
Nil
Nil
Nil
£87.01 - £100pw (£435pm)
0%
0%
Nil
0%
£100.01 - £670pw (£2,903pm)
11%
9.4%
Nil
12.8%
Over £670
1%
1%
Nil
12.8%
.

The reduced rate payable by certain married women and widows will remain 4.85%, payable on earnings between £100 and £670, 1% above £670 per week.

Class 1A (employers only) : 12.8% based on taxable benefits excluding childcare
Class 1B (employers only) : 12.8% in respect of amounts in PAYE settlement agreement
Class 2 - self-employed flat rate: £2.20 per week if earnings are over £4,635 pa
Class 3 - Voluntary: £7.80 per week
Class 4* - Self-employed: 8% on profits between £5,225 and £34,840pa, 1% over £34,840pa
*Exemption applies if state retirement age was reached by 6 April 2006


PERSONAL PENSIONS (PPPs) and RETIREMENT ANNUITY PREMIUMS (RAPs)

The maximum amount of contributions on which an individual can claim tax relief in 2007/08 is the greater of

  • The "basic" amount - currently £3,600: and
  • The amount of the individual's relevant UK earnings that are chargeable to income tax for the tax year up to a maximum of £225,000.

In certain circumstances it may be possible to contribute more than above, but specialist advice should be sought.

A tax charge potentially arises if the value of the pension at retirement exceeds the lifetime allowance.

The pension scheme lifetime allowance for 2007/08 is £1,600,000


 


RATES OF INHERITANCE TAX
Transfers on or Within Seven Years Before Death
  2007/2008 2006/2007
Nil rate band to £300,000 £285,000
Rate of tax on balance 40% 40%
Chargeable lifetime transfers 20% 20%


Main exemptions
Spouse/cival partner - both UK domiciled (or tranferor non domiciled): unlimited
Non domiciled spouse/cival partner - UK domiciled transferor: £55,000
Business property relief of 100% for all shareholdings in qualifying unquoted companies.
Similar relief for qualifying assets used in unincorporated businesses and working farms.
Annual exemption for chargeable lifetime transfers £3,000.
Small gifts - annual amount per donee £250.
Marriage gifts by
- parent: £5,000
- grandparent: £2,500
- other: £1,000

Charities and political parties: unlimited
Regular gifts out of surplus income are also exempt.



Reduced tax charge on transfers within 7 years of death

Years before death
% of death rates
0 - 3
100%
3 - 4
80%
4 - 5
60%
5 - 6
40%
6 - 7
20%
Over 7
NIL


CAPITAL GAINS TAX - 2007/08

Tax is charged at 10%, 20% and at 40% on chargeable gains as if they were additional savings income
Trustees' and personal representatives' gains are charged at 40% for 2007/08
.
Indextion allowance frozen as at 5 April 1998 for individuals and trusts.

Annual exemption
2007/2008
2006/2007
Individuals and personal reps
£9,200
£9,200
Trusts for diabled person
£9,200
£8,800
Most trusts
£4,600
£4,400
Chattels exemption - proceeds up to
£6,000
£6,000
Transfers between husband & wife living together
No Limit
No Limit

Companies: Gains charged to corporation tax after indexation, no annual exemption available.


TAPERING CHARGEABLE GAINS
Gains of business assets
Gains on non-business assets
Number of complete years after 6.4.98 for which asset held Percentage of gain chargeable Equivalent tax rates for higher rate/basic rate taxpayer Number of complete years after 5.4.98 for which asset held Percentage of gain chargeable Equivalent tax rates for higher rate/basic rate taxpayer
0 100 40/22 0 100 40/22.00
1 50 20/11 1 100 40/22.00
2 25 10/5.5 2 100 40/22.00
3 25 10/5.5 3 95 38/20.9
4 25 10/5.5 4 90 36/19.8
5 25 10/5.5 5 85 34/18.7
6 25 10/5.5 6 80 32/17.6
7 25 10/5.5 7 75 30/16.5
8 25 10/5.5 8 70 28/15.4
9 25 10/5.5 9 65 26/14.3
10 or more 25 10/5.5 10 or more 60 24/13.2

 


CORPORATION TAX
Y/E 31/3/2008
Y/E 31/3/2007
Small companies' rate up to £300,000 20%

19%

Upper marginal rate

£300,001 to 1,500,000

32.5% 32.75%
Full rate Over £1,500,00 30%

30


Companies with taxable profits of £1,500,000 ormore may be liable to quarterly instalment payments on account of tax liabilitis.


MAIN CAPITAL ALLOWANCES

Plant and machinery

  • first year allowance
    - small businesses
    - medium businesses
  • writing down allowance (some long life assets 6%)

 


50%

40% 25%

Motor cars (£3000 pa maximum for each car) 25%
Industrial buildings writing down allowance 4%
Plant & Machinery on Energy Technology list - From 17/04/02 100%
Low emissions cars, refueling equipment for gas & hydrogen fuel & water efficient technology 100%


VALUE ADDED TAX
Standard rate 17.5%
Reduced rate 5%
Registration level from 01/04/2007 £64,000 per annum
Deregistration level from 01/04/2007 £62000 per annum
Optional flat rate scheme - up to £150,000
Annual accounting scheme - up to £1,350,000
Cash Accounting Scheme £1,350,000

VAT as a fraction of gross price - 7/47ths


VAT SCALE RATES ON PRIVATE FUEL
(return periods starting after 01/05/2007)

Return Period
Monthly
Quarterly
Annual
CO2 band
Gross
VAT
Gross
VAT
Gross
Vat
140 or below £60 £8.94 £182 £27.11 £730 £108.72

145

£65 £9.68 £197 £29.04 £780 £116.17
150 £69 £10.28 £207 £30.83 £830 £123.62
155 £73 £10.87 £219 £32.62 £880 £131.06
160 £77 £11.47 £231 £34.40 £925 £137.77
165 £81 £12.06 £243 £36.19 £975 £145.21
170 £85 £12.66 £256 £38.13 £1,025 £152.66
175 £89 £13.26 £268 £39.91 £1,075 £160.11
180 £93 £13.85 £280 £41.70 £1,120 £166.81
185 £97 £14.45 £292 £43.49 £1,170 £174.26
190 £101 £15.04 £304 £45.28 £1,220 £181.70
195 £105 £15.64 £317 £47.21 £1,270 £189.15
200 £109 £16.23 £329 £49.00 £1,315 £195.85
205 £113 £16.83 £341 £50.79 £1,365 £203.30
210 £117 £17.43 £353 £52.57 £1,415 £210.74
215 £121 £18.02 £365 £54.36 £1,464 £218.19
220 £126 £18.77 £378 £56.30 £1,510 £224.89
225 £130 £19.36 £390 £58.09 £1,560 £232.34
230 £134 £19.96 £402 £59.87 £1,610 £239.79
235 £138 £20.55 £414 £61.66 £1,660 £247.23
240 or above £142 £21.15 £426

£63.45

£1,705 £253.94

 



OPTIONAL VAT FLAT RATE SCHEME FOR SMALL BUSINESSES

(HMCE Notice 733) Registration Allowed subject to certain exemptions, if expected turnover in the next 12 months is from 10/04/03 No more than £150,000 (previously £100,000) taxable supplies; and* No more than £187,500 (previously £125,000) total business income.

Calculate vat payable by multiplying the flat rate percentage for the relevant trade sector by total income.

N.B. Supplies to other Vat registered businesses are invoiced at the normal rate for the supply

FLAT RATE PERCENTAGE BY TRADE SECTOR
Category of Business
%
Retail of food, confectionery, tobacco, newspapers or childrens' clothing
2.0
Membership organisation - Postal & Courier Services - Pubs - Wholesale food
5.5
Retail of goods not elsewhere listed - Wholesale of agricultural products - Agriculture not elsewhere listed
6.0

Retail of pharmaceuticals, medical goods, cosmetics or toiletries
- Sport or recreation - Retail of Vehicles or fuel - Wholesale not elsewhere listed

7.0
Agriculture services - Library, achive, musem or other cultural activity - Manufacturing food - Printing - Repairing vehicles
7.5
Packaging - Building or construction services where materials supplied - Social work - Agricultural services - Hiring or renting goods - Manufacture of textiles or clothing - Other manufacture not elsewhere listed - Personal and household goods repair service
8.5
Forestry or fishing - Mining or quarrying - Transport or storage, including freight, removals and taxis - Travel agency
9.0
Advertising - Retail of machinery, equipment, personal or household goods - Waste and scap dealing - Hotel or accommodation - Photography - Publishing - Veterinary medicine -
9.5
Animal husbandry - Manufacture of fabricated metal products - Investigation or security - All other activity not elsewhere listed
10.0
Boarding or care of animals - Film, radio, television or video production
10.5
Estate agency or property management - Secretarial services - Entertainment, excluding television, video and film production - Laundry services - Business services not elsewhere listed -Computer repair services -
11.0
Financial services
11.5
Restaurants, takeaways or catering services - Hairdressing - Real estate activity not elsewhere listed
12.0
Management consultancy - Architects, cival & structural engineer
12.5
Accountancy and bookkeeping - Computer and IT consultancy or data processing - Building or construction services where primarily only labour supplied - Lawyers and legal services
13.0
Building or construction services where primarily only labour supplied
13.5

 



STAMP DUTY
Transfers by sale
% of Consideration
Shares and marketable securities
0.5%

Land and other property - Residential
£0 - £125,000
£125,001 - £250,000

£250.001 - £500,000
Over £500,000


Nil
1%
3%
4%

Land and other property - Non-residential
£0 - £150.000
£150,001 - £250,000
£250,001 - £500,000
Over £500,000

Nil
1%
3%
4%
Transfers by gift
NIL
Property that is not land, shares or interests in partnerships is no longer subject to stamp duty.

New Leases (lease duty)

Charge for the rental element of leases is 1% on the net present value (NPV) of the rental payments to the extent that the NPV exceeds £125,000 for residential property of £150,000 for non-residential property.

Lease premiums are charged at the same rates as for freehold transfers, unless the annual rent exceeds £600, in which case there will be no zero band for the premium and the 1% charging band will apply to premiums up to £250,000.

 




PENSIONS AND BENEFITS

 


Basic Retirement Pension

Basic person
On husband's insurance
Addition at age 80
Value of graduated pension unit

Weekly Benefit
2007/2008
2006/2007


£87.30
£52.30
£0.25
0.1057


£84.25
£50.50
£0.25
0.1020

Child Benefit & Guardian's Allowance
Child Benefit - eldest or only child
- each other child
- first child of lone parent
Guardian's Allowance


£18.10
£12.10
spent
£12.95

£17.45
£11.70
£17.55
£12.50
Statutory Sick Pay (SSP)
Earnings threshold
Standard Rate