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  Rates of Income Tax for 2007/8  

Band

Taxable Income "Earned" Rate

Savings Rate *

Dividend Rate *

Starting Rate up to £2,230 10%

10%

10%

Basic Rate £2,231 to £34,600 22% 20% 10%
Higher Rate Over £34,600 40% 40% 32.5%
* = In general, to determine the rate of tax the gross savings income is added to other taxable income.

* = In general, to determine the rate of tax the gross dividend income is treated as the top-slice of income.

  Income Tax Allowances for 2007/8  

Income tax allowances

2006-07 (£)

2007-08 (£)

Personal allowance (not transferable)

£5,035

£5,225

Personal allowance for age 65 - 74

£7,280

£7,550

Personal allowance for age 75 and over

£7,420

£7,690

Married couple’s allowance for age 65 - 74*

£6,065

£6,285

Married couple’s allowance - aged 75 or over*

£6,135

£6,365

Income limit for age-related allowances

£20,100

£20,900

Blind person’s allowance

£1,660

£1,730

Inheritance Tax Threshold*

£285,000

£300,000

* The age-related allowances are reduced by £1 for every £2 of the individual's income above the income limit subject to the minimum personal allowances of those aged up to 65. For those still entitled to age related married couple's allowance, the minimum amount is reduced to £2,440

* Taxed at 40% on excess with exceptions.

Married Couple's Allowance is only available for married couples where at least one of the parties was aged 65 or over before 6th April 2000. However, where a person born before 6th April 1935 gets married they or their spouse will be able to claim MCA.

The rate of relief for the continuing married couple’s allowance and maintenance relief for people born before 6 April 1935, and for the children’s tax credit, is 10%. CTC only available in the year of the child's birth.

  Individual Savings Account (ISA)  

  MAXI ISA MINI ISA TESSA only
Subject to a maximum overall contribution of £7,000 Care : limited opportunity
Stocks & Shares up to £7,000 up to £3,000  
Cash up to £3,000 up to £3,000 Up to £9,000 from maturing TESSA Capital only not interest

The above table details the contributions that can be made to each component for 2007/8


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