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Summary of Main Tax Changes 2005-06
| Income Tax/National Insurance | ||
|---|---|---|
| Personal Allowance | £4,895 | up £150 |
| Personal Allowance 65-74 | £7,090 | up £260 |
| Personal Allowance 75+ | £7,220 | up £279 |
| Income Limit for Age-related allowance | £19,500 | up £600 |
| Married Couples Allowance for | ||
|---|---|---|
| People born before 6/4/35 | £5,905 | up £180 |
| Married Couples Allowance 75+ | £5,975 | up £180 |
| Minimum Married Couples Allowance | £2,280 | up £70 |
| Blind Person's Allowance | £1,610 | up £50 |
| Tax Bands | |
|---|---|
| 10% (Starting Rate) | £0-2,090 |
| 22% (Basic Rate) | £2,090-32,400 |
| 40% (Higher Rate) | £32,400+ |
NOTES: Dividend income is "top-sliced", followed by interest income and then other income. Higher rate taxpayers pay tax on dividends at 32.5%. Interest income is taxed at 10%, 20% and 40% in the respective bands.
| National Insurance (Class 1 Employed) | |
|---|---|
| Threshold | £94/week |
| Upper Earnings limit | £630/week |
| Contracted in contributions rate (£94.01-£630/week) | 11% |
| Contracted in contributions rate (above £630/week) | 1% |
NOTES: Rebates apply for contracted-out employees and employees in certain pension schemes and other rates apply to married women and the self-employed.
Tax Credits
Tax credits must be claimed promptly or lost. Unclaimed personal allowances may be retrieved from the Inland Revenue up to six years later BUT tax credits, like most state benefits, may only be backdated for up to three months. Request a claim form or check your eligibility by calling the Inland Revenue on 0800 500 022.
Child Tax Credit
Parents, married or unmarried, earning up to £50,000 a year may claim CTC of £545/year for a child aged up to 16 (18 if in full-time education), doubled to £1,090/year for families with a child under one. Families with income below £13,910 may claim CTC of £1,690/year for each child. Above these thresholds, the credit is gradually withdrawn.
Working Tax Credit
The Working Tax Credit is paid via employers. The basic element rises by £50 to £1,620.
Pension Credit
A payment of £200 will be made to every household with someone over 65 to go towards the cost of council tax.
| Capital Gains Tax Threshold | ||
|---|---|---|
| Individuals | £8,500 | up £300 |
| Inheritance Tax Threshold | £275,000 | up £12,000 |
| Pension Earnings Cap | £105,600 | up £3,600 |
| Stamp Duty | ||
|---|---|---|
| Residential | Non-Residential | |
| Nil | <£120,000 | <£150,000 |
| 1% | >£120,000 | >£150,000 |
Excise Duties
Vehicle Excise Duty for cars registered before March 2001 is frozen at £110 for those with engine capacity below 1549cc. For cars with larger engines the rate rises by £5 to £170. Graduated VED for newer vehicles is frozen for vehicles in bands A to D but rises by £5 a year for those in bands E and F. Fuel duties will increase but the rise has been deferred until September 1 because of continued volatility in world oil markets.
Beer rises by a penny a pint, wine by 4p a bottle. Duty on sparkling wines and spirits is unchanged.
Cigarettes up 7p/pack; cigars 3p/pack of five; rolling tobacco up 8p/25g and pipe tobacco up 5p/25g.
The limit on duty free goods brought in from outside the European Union is raised to £1000 from £145, the level it had been left at since 1994.