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Essentials
news
| information | enquiries
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
Budget 2008
If you use our Weekly
Till Sheets or Mileage Log Sheets you can download them here
Weekly
Till Sheet
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.
|
|
|
|
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
|
|