UK Rates and allowances
UK Rates and allowances
Tax rates
Note
2004/05
2003/04
Starting rate band to
£2,020
£1,960
Tax rate
10%
10%
Basic rate band - next
£29,380
£28,540
Non-savings rate
22%
22%
Savings rate
20%
20%
UK dividend rate
10%
10%
Higher rate - taxable income over
£31,400
£30,500
Higher tax rate
40%
40%
UK dividend rate
32.5%
32.5%
Trusts
Income tax rates and allowances - rate.co.uk
Tax rate
40%
34%
UK dividend rate
32.5%
25%
Allowances that reduce taxable income
Personal allowance (PA)
under 65
1
£4,745
£4,615
65 to 74
1,3
£6,830
£6,610
75 and over
1,3
£6,950
£6,720
Blind person's allowance
£1,560
£1,510
Allowances that reduce tax
Married couple's allowance (MCA)
Tax reduction
70 to 74
1,2,3
£572.50
£556.50
75 and over
1,2,3
£579.50
£563.50
The age-related allowances are progressively withdrawn if income exceeds
£18,900
£18,300
Minimum PA
£4,745
£4,615
Minimum MCA tax reduction
£221
£215
Tax Shelters
Enterprise Investment Scheme (EIS) up to
4
£200,000
£150,000
Venture Capital Trust (VCT) up to
5
£200,000
£100,000
Golden Handshake max.
£30,000
£30,000
Rent a Room - exempt on gross annual rent up to
£4,250
£4,250
Notes
Ages are as the end of the tax year. Ages for the MCA relate to the elder of husband or wife.
MCA is available only to those couples where at least one spouse was born before 6 April 1935.
The higher rates of personal allowances are reduced by £1 for each £2 of excess income over £18,900 (2003/04 £18,300) until the basic allowance is reached. Similar limits apply to the married couple's allowance: the loss of tax reduction is 10p for each £2 of excess income (only the husband's income is taken into account) until the minimum of £221 (2003/04 £215) is reached.
Subscription for new ordinary shares - 20% income tax relief. Also such investments by subscription are eligible for deferral of capital gains tax on unlimited gains re-invested.
Subscriptions for new ordinary shares - 20% income tax relief. For 2004/05 and 2014/06, additional income tax relief of 20% will be paid direct to the VCT.
Capital Gains Tax
Capital gains tax rates and bands are as follows:
2004/05
2003/04
Taxed as top slice of savings income
Annual exemption
- individual
£8,200
£7,900
- settlements (spread over total number)
£4,100
£3,950
Transfers between husband and wife living together are exempt
Chattels exemption
(proceeds per item or set)
£6,000
£6,000
Taper Relief
For gains realised after 5 April 1998 by individuals or trustees, indexation allowance is frozen and the gain reduced by a tapering relief. The value of the taper relief depends on whether or not the asset is a business asset, and on the number of complete years the asset has been held after 5 April 1998 (with an additional "bonus" year for non-business assets held on 16 March 1998).
Non-Business Assets
No. of complete years
held after 5 April 1998
% gain chargeable
1
100
2
100
3
95
4
90
5
85
6
80
7
75
8
70
9
65
10 or more
60
Business Assets
No of complete years
held after 5 April 1998
Disposals After 5 April 2002
% of gain chargeable
0
100
1
50
2 or more
25
Notes
1. Transfers between husband and wife living together are exempt.
2. Capital gains are regarded as the top slice of savings income. Rates of 10%, 20% and 40% will therefore apply to gains taxed on individuals, as appropriate. Gains taxed on trustees are usually taxed at the special trust rate of 40% (2003/04 34%).
Corporation Tax
Corporation tax rates and bands are as follows:
Financial Year Commencing
1 April 2004
1 April 2003
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%
On profits over £1,500,000
30%
30%
From 1 April 2004, a minimum tax rate of 19% is charged when profits are distributed to individual shareholders by a company or group. Lower tax rates will continue to apply where profits are retained or distributed to other companies.
Capital Allowances
Motor Cars
On reducing balance (max. £3,000 p.a. per car)
25%
Plant and machinery
Small firms:
Allowance for the first year
50%
Writing down allowance on reducing balance
25%
Medium firms:
Allowance for the first year
40%
Writing down allowance on reducing balance
25%
Large firms:
Writing down allowance only on reducing balance
25%
Long Life Assets
Allowance for first year
6%
Writing down allowance for subsequent years on reducing balance
6%
Energy Saving Technology
All firms
100%
Electric and Low Emission Cars
Registered on or after 17 April 2002
100%
Buildings
Industrial buildings and qualifying hotels
4% of building cost p.a.
Commercial/Industrial buildings in an enterprise zone
100% of building cost
Agricultural buildings
4% of building cost p.a.
Research and Development
100%
Notes
1. Capital allowances allow the cost of capital assets to be written off against taxable profits. They replace the charge for depreciation in the business accounts, which is not allowable for tax relief.
2. A small firm is defined as a business that satisfies any two of the following conditions: (a) turnover £5,600,000 or less (b) assets £2,800,000 or less (c) not more than 50 employees.
3. A medium firm is defined as a business that satisfies any two of the following conditions: (a) turnover £22,800,000 or less (b) assets £11,400,000 or less (c) not more than 250 employees.
Value Added Tax
From
1 April 2004
10 April 2003
Standard rate
17.5%
17.5%
VAT fraction
7/47
7/47
Taxable Turnover Limits
Registration - last 12 months or next 30 days over
£58,000
£56,000
Deregistration - next 12 months under
£56,000
£54,000
Cash accounting scheme - up to
£660,000
£600,000
Optional flat rate scheme - up to
£150,000
£150,000
Annual accounting scheme - up to
£660,000
£600,000
Quarterly Return – Scale figure for private use of fuel
From 1 May 2004
Petrol
scale charge
VAT due per car
Up to 1400cc
£232
£34.55
1401cc - 2000cc
£293
£43.63
Over 2000cc
£432
£64.34
Diesel
Up to 2000cc
£216
£32.17
Over 2000cc
£273
£40.65
Inheritance Tax
Transfers on or Within Seven Years Before Death
2004/05
2003/04
Nil rate band to
£263,000
£255,000
Rate of tax on balance
40%
40%
Chargeable lifetime transfers
20%
20%
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 then be reduced by taper relief.
Charge on Gifts Within 7 Years of Death
Years before death
0-3
3-4
4-5
5-6
6-7
Tax reduced by
0%
20%
40%
60%
80%
Main Relief’s
Business property:
- business or interest therein
100%
- qualifying shareholders in unquoted* companies
100%
- land, buildings, machinery, or plant used by transferor's controlled company or partnership
50%
Agricultural property
50% or 100%
*Unquoted companies include those listed on AIM
Main Exemptions
1. Transfers to UK domiciled spouse - exempt.
2. Transfers to non UK domiciled spouse - £55,000.
3. Annual exemption - per donor - £3,000.
4. Small gifts per donee - £250 p.a.
5. Gifts in consideration of marriage to bride and/or groom of: up to £5,000 by a parent, up to £2,500 by a grandparent, or up to £1,000 by any other person.
6. Normal gifts out of income - no limit.
7. Gifts to charities - exempt
Vehicle Benefits
Car Benefit
The tax you pay on your company car is governed by four factors:
1. the list price of the car, on the day before it was first registered, plus certain accessories,
2. the rate at which the car emits carbon dioxide (CO2),
3. the fuel type
(for most types of car, this is all the information you need to work out the taxable benefit)
4. your highest rate of income tax.
You can find your taxable percentage for 2004/05 using the following table:
CO2
Taxable %
CO2
Taxable %
CO2
Taxable %
in g/km
Petrol
Diesel
in g/km
Petrol
Diesel
in g/km
Petrol
Diesel
Less than 150
15%
18%
180 to 184
22%
25%
215 to 219
29%
32%
150 to 154
16%
19%
185 to 189
23%
26%
220 to 224
30%
33%
155 to 159
17%
20%
190 to 194
24%
27%
225 to 229
31%
34%
160 to 164
18%
21%
195 to 199
25%
28%
230 to 234
32%
35%
165 to 169
19%
22%
200 to 204
26%
29%
235 to 239
33%
35%
170 to 174
20%
23%
205 to 209
27%
30%
240 to 244
34%
35%
175 to 179
21%
24%
210 to 214
28%
31%
245 and over
35%
35%
How to find out how much CO2 your company car emits – see:
· the car’s V5 registration document
· your dealer
· the data pages of car magazines (current models)
· the Vehicle Certification Agency – www.vca.gov.uk
· the website of the Society of Motor Manufacturers and Traders - www.smmt.co.uk/co2/co2search.cfm
Reliable emissions data is not widely available for cars registered before 1 January 1998. For them, the following taxable percentages apply, regardless of fuel type:
Engine capacity
Taxable %
Up to 1400cc
15%
1401 - 2000cc
22%
Over 2000cc
32%
Van Benefit
Van under 4 years old
Van 4 years old, or over
Benefit per vehicle
£500
£350
Car fuel benefits
If the employee pays for the full cost of all fuel for private journeys (usually including home to work) there will be no car fuel benefit. In all other cases the full tax charge will be due.
The taxable car fuel benefit is, for 2004/05, calculated by multiplying £14,400 by the same percentage as applies (or would apply) for the car benefit.
Example: A company car driver has a car which, on the day before it was first registered, had a list price of £18,000. It runs on petrol, and emits 182 g/km of CO2.
If we assume the driver pays tax at 40%, the annual tax bill on the car is: £18,000 x 22% x 40% = £1,584
If the employer provides any fuel used for private journeys and is not re-imbursed for the cost, the 2004/05 tax bill for the fuel is: £14,400 x 22% x 40% = £1,267.20.
Mileage Allowances
For Employees Using Their Own Transport
The approved maximum tax and national insurance free mileage allowances for employees using their own transport for business are as follows:
Flat Rate
First 10,000 Miles
Miles over 10,000
Car
40p
25p
Motorcycle
24p
24p
Bicycle
20p
20p
Income Tax and NICs are due when allowances exceed these rates. Employees can claim tax relief on any shortfall.
Rates of up to 5p per mile, per passenger, are also tax and NIC free when paid for the carriage of fellow employees on the same business trip.
Fuel-Only Mileage Rates
Inland Revenue advisory mileage rates for employee private mileage reimbursement or employer reimbursement of business mileage are:
Petrol
Diesel
LPG
Up to 1400cc
10p
9p
6p
1401cc - 2000cc
12p
9p
7p
Over 2000cc
14p
12p
9p
Income tax and NICs may be due on higher rates and tax relief may be due on lower rates.
National Insurance Contributions
Class 1 (not contracted out)
Employer
Employee
payable on weekly earnings
£91.01 - £610
12.8%
11%
Over £610
12.8%
1%
Men 65 and over and
women 60 and over
as above
Nil
Class 1A (on relevant benefits)
12.8%
Nil
Class 1B (on PAYE settlement arrangement)
12.8%
Class 2 (Self employed)
£2.05 per week
Limit of net earnings for exception
£4,215 per annum
Class 3 (Voluntary)
£7.15 per week
Class 4 (* Self employed on profits)
£4,745 to £31,720
8%
Excess over £31,720
1%
*Exemption applies if state retirement age was reached by 6 April 2004.
Note
For those earning between £79 per week and £610 per week, employers receive a rebate of 1.0% on contracted out money purchase schemes or 3.5% on contracted out final salary schemes, and employees, a rebate of 1.6% for either scheme.
Key Dates and Deadlines
Income Tax (including Class 4 NIC)
31 July 2004
2003/04 second payment on account
31 January 2014
2003/04 balancing payment, and
2004/05 first payment on account
31 July 2014
2004/05 second payment on account
31 January 2006
2004/05 balancing payment, and
2014/06 first payment on account
Capital Gains Tax
31 January 2014
2003/04 Capital Gains Tax
31 January 2006
2004/05 Capital Gains Tax
Corporation Tax
9 months and one day after the end of the accounting period
Inheritance Tax
6 months after the end of the month of death or chargeable transfer.
For chargeable lifetime transfers between 6 April and 30 September, due date is 30 April in the following year.
Latest Filing/Issuing Deadlines -2003/04 PAYE Returns
19 May 2004
P14, P35, P38, and P38A and CIS36
31 May 2004
Issue P60s to employees
6 July 2004
P9D, P11D and P11Db - also issue copies to employees
2003/04 Class 1A National Insurance on Relevant Benefits
19 July 2004
Payment due
2004 Tax Return
31 January 2014
Last filing date
Some Useful Rates
Weekly Benefit
2004/05
2003/04
Basic Retirement Pension
Single person
£79.60
£77.45
Married couple
£127.25
£123.80
Child Benefit
First eligible child
£16.50
£16.05
Each subsequent child
£11.05
£10.75
Statutory Sick Pay (SSP)
Average weekly earnings £79 or over (2003/04 £77)
£66.15
£64.35
Statutory Maternity Pay (SMP)
90% of average weekly pay
First 6 weeks
Maximum £102.80. Minimum 90% average weekly pay
Next 20 weeks
Minimum rate
£71.10
£69.30
Adoption Pay (SAP)
26 weeks
Paternity Pay (SPP)
1 week or fortnight
Both SAP and SPP
90% of average weekly pay
Max £102.80
Min £71.10
Max £100.00
Min £69.30
Example rates:
Jobseekers Allowance
Single person
£55.65
£54.65
Married couple
£87.30
£85.75
National Minimum Wage
From 1 October 2003
£4.50 p.h.
From 1 October 2004
£4.85 p.h.