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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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