gift tax

West Norfolk Taxation Service

Rates and Allowances

Income Tax Bands & Rates

Income Tax Allowances

Tax Shelters

National Insurance

Individual Savings Accounts

Pension Premiums

Capital Gains Tax

CGT Taper Relief

Corporation Tax

Capital Allowances

Tax Free Mileage Allowances

Car And Fuel Benefits

Van Benefits

Fuel Rates

Charitable Gifts

Inheritance Tax

Stamp Duty

Value Added Tax

Minimum Wage

Tax Credits & Child Benefit

Social Security Benefits

Key Tax Dates

Income Tax Bands & Rates

Taxable Bands

2006-07 (£)

2005-06 (£)

Starting rate 10%

0 - 2,150

0 - 2,090

Basic rate 22%

2,150 - 33,300

2,090 - 32,400

Higher rate 40%

Over 33,300

Over 32,400

Savings income is generally treated as the highest part of total income.

Interest is taxed at 10% within the starting rate band, 20% within the basic rate band and 40% thereafter.

Income from dividends is taxed at 10% within the starting and basic rate bands and at 32.5% thereafter (these rates are applied to the dividend grossed-up by a tax credit of 1/9).

Back to top

Income Tax Allowances

 

2006-07 (£)

2005-06 (£)

Personal allowance

5,035

4,895

Personal allowance for people aged 65-74 in year of assessment

7,280

7,090

Personal allowance for people aged 75 and over in year of assessment

7,420

7,220

Income limit for age-related allowances

20,100

19,500

Married couple's allowance for people born before 6 April 1935 (relief at 10%)

6,065

5,905

Married couple's allowance - aged 75 or more (relief at 10%)

6,135

5,975

Minimum amount of married couple's allowance

2,350

2,280

Blind person's allowance

1,660

1,610

Back to top

Tax Shelters

 

2006-07 (£)

2005-06 (£)

Enterprise Investment Scheme (EIS) up to

400,000

200,000

Venture Capital Trust (VCT) up to

200,000

200,000

Golden Handshake maximum

30,000

30,000

Rent a Room - exempt on gross annual rent up to

4,250

4,250

Back to top

National Insurance

£ per week

2006-07

2005-06

Employees

 

 

Lower earnings limit, primary Class 1

£84

£82

Upper earnings limit, primary Class 1

£645

£630

Primary threshold

£97

£94

Secondary threshold

£97

£94

Employees' primary Class 1 rate between primary threshold and upper earnings limit

11%

11%

Employees' primary Class 1 rate above upper earnings limit

1%

1%

Employees' contracted out rebate

1.6%

1.6%

Married women’s reduced rate between primary threshold and upper earnings limit

4.85%

4.85%

Married women’s rate above upper earnings limit

1%

1%

Employers’ secondary Class 1 rate above secondary threshold

12.8%

12.8%

Employers’ contracted-out rebate, salary-related schemes

3.5%

3.5%

Employers’ contracted-out rebate, money-purchase schemes

1%

1%

Employees' Rates are reduced to 4.85% for married women with valid certificates of election but the 1% rate above £645 still applies. Rates are nil for men over 65 and women over 60. Normal employers' contributions are still payable.

Class 1A and Class 1B

12.8%

12.8%

Class 2 rate (self-employed)

£2.10

£2.10

Class 2 small earnings exception

£4,465
per year

£4,345
per year

Special Class 2 rate for share fishermen

£2.75

£2.75

Special Class 2 rate for volunteer development workers

£4.20

£4.10

Class 3 rate (voluntary contributions)

£7.55

£7.35

Class 4 lower profits limit (self-employed)

£5,035
per year

£4,895
per year

Class 4 upper profits limit (self-employed)

£33,540
per year

£32,760
per year

Class 4 rate between lower profits limit and upper profits limit

8%

8%

Class 4 rate above upper profits limit

1%

1%

Back to top

Individual Savings Accounts

Annual exempt amount

Overall Limit (£)

Cash Limit (£)

2006/07

7,000

3,000

2005/06

7,000

3,000

Savings are exempt from income tax and capital gains tax.

Back to top

Pension Premiums

New rules apply with effect from 6th April 2006 (commonly known as A-Day):

  • Maximum amount of pension contributions that qualify for tax relief is the greater of £3,600 or the  individuals UK relevant earnings.
  • Contributions in excess of £215,000 give rise to a tax charge of 40% on the excess.
  • Employer contributions need to be "wholly and exclusively" for the benefit of the trade to obtain tax relief.
  • Minimum age for taking benefits is 50.
  • Maximum age for tax relief on contributions is 74.
  • Lifetime allowance is £1,500,000
  • Maximum tax-free lump sum is 25%.

Back to top

Capital Gains Tax

Annual exempt amount

2006-07 (£)

2005-06 (£)

Individuals etc*

8,800

8,500

Other trustees

4,400

4,250

* Individuals, trustees of settlements for the disabled, and personal representatives of the estate of a deceased person.

The amount chargeable to CGT is added onto the top of income liable to income tax for individuals and is charged to CGT at these rates:

  • · below the starting rate limit at 10%,
  • · between the starting rate and basic rate limits at 20%,
  • · and above the basic rate limit at 40%.
  • Transfers between husband and wife living together are exempt.
  • Back to top

    CGT Taper Relief

     

    % of gain relieved

    Complete years held
    after 5/4/1998*

    Business Assets

    Non -Business Assets

    1

    50

    0

    2

    75

    0

    3

    75

    5

    4

    75

    10

    5

    75

    15

    6

    75

    20

    7

    75

    25

    8

    75

    30

    9

    75

    35

    10 or more

    75

    40

    * Including one bonus year for non-business assets held on 17 March 1998

    Back to top

    Corporation Tax

    Corporation Tax On Profits - £ per year (unless stated)

    Rate

    Financial Year to 31/3/2007

    Financial Year to 31/3/2006

    Starting rate: 0%

    N/A

    0 - 10,000

    Marginal relief

    N/A

    10,001 - 50,000

    Marginal relief fraction

    N/A

    19/400

    Effective marginal rate

    N/A

    23.75%

    Small companies rate: 19%

    0 - 300,000

    50,001 - 300,000

    Marginal relief

    300,001 - 1,500,000

    300,001 - 1,500,000

    Marginal relief fraction

    11/400

    11/400

    Effective marginal rate

    32.75%

    32.75%

    Main rate: 30%

    1,500,001 or more

    1,500,001 or more

    Non-corporate distribution rate

    N/A

    19%

    The profits limits are reduced for accounting periods of less than 12 months and for a company with associated companies.

    Back to top

    Capital Allowances

     

    Writing Down Allowance

    First Year Allowance

    Plant and machinery

    25% reducing balance (6% for some long life assets)

    See note below

    Energy saving plant and machinery

    100%

    100%

    Motor cars

    25% reducing balance (£3000 max)

    100% on new cars with CO2 emission not exceeding 120gm/km

    Industrial buildings

    4% straight line

     

    Agricultural buildings

    4% straight line

     

    Research & Development

     

    100%

    Commercial/industrial buildings in an enterprise zone

     

    100%

    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.

    Plant and machinery FYA

    For small businesses: first year allowance (FYA) of 40% is available for 12 months from 6.4.05 (1.4.05 for companies). FYA of 50% available from 6.4.06 (1.4.06 for companies). 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.

    For medium-sized businesses: FYA of 40%. 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.

    Back to top

    Tax Free Mileage Allowances

     

    First 10,000 business miles in the tax year

    Each mile over 10,000 miles in the tax year

    Extra passenger making same trip

    Cars and vans

    40p

    25p

    5p

    Motor cycles

    24p

    24p

    N/A

    Bicycles

    20p

    20p

    N/A

    These rates represent the maximum tax-free mileage allowances for employees using their own vehicles for business. Any excess is taxable. If the employee receives less than the statutory rate, tax relief can be claimed on the difference.

    Back to top

    Car And Fuel Benefits

     

    % of list price (max £80,000)

    CO2 emissions
    (2006/07)
    grams per kilometre

    Petrol

    Diesel

    140

    15

    18

    145

    16

    19

    150

    17

    20

    155

    18

    21

    160

    19

    22

    165

    20

    23

    170

    21

    24

    175

    22

    25

    180

    23

    26

    185

    24

    27

    190

    25

    28

    195

    26

    29

    200

    27

    30

    205

    28

    31

    210

    29

    32

    215

    30

    33

    220

    31

    34

    225

    32

    35

    230

    33

    35

    235

    34

    35

    240

    35

    35

    To find out how the CO2 figure for your car, you can...

    • · visit the Vehicle Certification Agency www.vca.gov.uk
    • · inspect the car's V5 registration document
    • · ask your dealer
    • · look at the data pages of car magazines
  • For cars registered from 1 January 1998 with no CO2 emissions figures, the tax charge is 15% of the list price for engines up to 1,400 cc, 22% for engines of 1,401 cc to 2,000 cc and 32% for engines above 2,000 cc.
  • The list price includes accessories and is subject to an upper limit of £80,000.

    List price is reduced for capital contributions made by the employee up to £5,000.

    Fuel Benefits

    For 2006/07, car fuel is calculated by applying the above car benefit percentage to a figure of £14,400.

    The fuel benefit charge is proportionately reduced if provision of private fuel ceases part way through the year.

    The fuel benefit is reduced to nil only if the employee pays for all private fuel.

    Back to top

    Van Benefits

    Per vehicle - 2006/07 and 2005/06

    Vehicles under 4 years old
    £500

    Vehicles at least 4 years old
    £350

    From 6 April 2005 there is no taxable benefit where employees have to take their company vans home and are not allowed any other private use. Otherwise, the taxable benefit for the private use of a company van and fuel, if supplied, is £500 or £350 (vans less or more than four years old) per annum, until 5 April 2007.

    From 6 April 2007 the taxable benefit for the unrestricted use of company vans will be £3,000 (with no reduction for older vans) plus a further £500 of taxable benefit if fuel is provided by the employer for private travel.

    The maximum tax payable on the use of a company van will therefore increase from April 2007 from £200 to £1,400 p.a., and the employer's Class1A NIC payable will increase from £64 to £448 p.a.

    Back to top

    Fuel Rates

     

    Petrol

    Diesel

    LPG

    Up to 1400cc

    11p

    10p

    7p

    1401cc to 2000cc

    13p

    10p

    8p

    Over 2000cc

    18p

    14p

    11p

    Back to top

    Charitable Gifts

    Gift Aid

    Individuals can claim higher rate relief on cash gifts and payments to charities using gift aid. It allows a charity to reclaim the basic-rate tax on donations made by UK taxpayers from HMRC. Higher rate taxpayers can claim an additional 18% tax relief on the gross donation through their tax return.

    You can make a claim for a charitable donation made in one tax year to be treated as if it had been made in the previous tax year.

    To qualify for gift aid you must pay at least as much tax as the amount the charities will reclaim on your gifts in the tax year in which you make them. You must make a declaration to the charity concerned.

    Give As You Earn

    Give As You Earn allows employees to make regular donations tax-free from their gross salary. The employer will deduct the amount from their salary for payment to the charity.

    The taxable pay of the employee is reduced by the amount of their donation.

    Back to top

    Inheritance Tax

    Inheritance Tax Thresholds

    Year

    Amount (£)

    2006-07

    285,000

    2005-06

    275,000

    Amounts above the threshold are taxed at 40%.

    Most transfers between spouses and civil partners are exempt.

    Chargeable lifetime transfers are initially charged at 20%.

    Business Property Relief

    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

    Other Reliefs:

    Annual gifts of up to £3000 per donor are exempt.

    Small gifts £250

    Marriage gifts...
    - parent £5,000
    - grandparent £2,500
    - bride/groom £2,500
    - other £1,000

    Reduced charge on gifts made within seven years of death:

    Years before death

    0-3

    3-4

    4-5

    5-6

    6-7

    % of death charge

    100

    80

    60

    40

    20

    Back to top

    Stamp Duty

    Please note that the applicable rate of Stamp Duty Land Tax must be applied to the whole of the consideration paid to acquire the land / buildings.

    Rate

    Land in disadvantaged areas

    All other land
    in the UK

    Residential

    Non-residential

    Residential

    Non-residential

    Zero

    £0 - £150,000

    £0 - 150,000

    £0 - 125,000

    £0 - 150,000

    1%

    Over £150,000
    - 250,000

    Over £150,000
    - 250,000

    Over £125,000
    - 250,000

    Over £150,000
    - 250,000

    3%

    Over £250,000
    - 500,000

    Over £250,000
    - 500,000

    Over £250,000
    - 500,000

    Over £250,000
    - 500,000

    4%

    Over £500,000

    Over £500,000

    Over £500,000

    Over £500,000

    New leases (lease duty)

    Duty on rent

    Rate

    Net present value of rent

    Residential

    Non-residential

    Zero

    £0 - 125,000

    £0 - £150,000

    1%

    Over £125,000

    Over £150,000

    Please note that when calculating duty payable on the 'NPV' (Net Present Value) of leases, you must reduce your 'NPV' calculation by the following before applying the 1% rate.

    Residential - £125,000
    Non-Residential - £150,000

    Duty on premium is the same as for transfers of land (except special rules apply for premium where rent exceeds £600 annually).

    The rate of stamp duty / stamp duty reserve tax on the transfer of shares and securities is unchanged at 0.5% for 2006-07.

    Back to top

    Value Added Tax

    Standard Rate

    17.5%

    VAT Fraction

    7/47

    Lower rate

    5%

    Registration level from 1 April 2006

    £61,000 p.a.

    Deregistration limit from 1 April 2006

    £59,000 p.a.

    Cash accounting scheme - up to

    £660,000

    Optional flat rate scheme - up to

    £150,000

    Annual accounting scheme - up to

    £1,350,000

    VAT fuel scale charges from 1 May 2006

     

    Quarterly Returns Scale Charge

    Cylinder capacity of vehicle

    Petrol
    £

    VAT
    £

    Diesel
    £

    VAT
    £

    Up to 1400cc

    273

    40.66

    260

    38.72

    1401cc to 2000cc

    346

    51.53

    260

    38.72

    Over 2000cc

    508

    75.66

    331

    49.30

    Back to top

    Minimum Wage

     

    From 1 October 2006

    From 1 October 2005

    22 and over

    £5.35 p.h.

    £5.05 p.h.

    18 - 21

    £4.45 p.h.

    £4.25 p.h.

    16 and 17

    £3.30 p.h.

    £3.00 p.h.

    Back to top

    Tax Credits & Child Benefit

    Rates and Thresholds

    2006-07

    2005-06

    Working Tax Credit - £ per year (unless stated)

    Basic element

    1,665

    1,620

    Couple and lone parent element

    1,640

    1,595

    30 hour element

    680

    660

    Disabled worker element

    2,225

    2,165

    Severe disability element

    945

    920

    50+ Return to work payment
    (16-29 hours)

    1,140

    1,110

    50+ Return to work payment
    (30+ hours)

    1,705

    1,660

    Childcare Element of the Working Tax Credit
    - £ per year (unless stated)

    Maximum eligible cost for one child

    £175 per week

    £175 per week

    Maximum eligible cost for two or more children

    £300 per week

    £300 per week

    Percentage of eligible costs covered

    80%

    70%

    Child Tax Credit Family element

    545

    545

    Family element, baby addition

    545

    545

    Child element

    1,765

    1,690

    Disabled child element

    2,350

    2,285

    Severely disabled child element

    945

    920

    Income thresholds and withdrawal rates
    - £ per year (unless stated)

    First income threshold

    5,220

    5,220

    First withdrawal rate (per cent)

    37%

    37%

    Second income threshold

    50,000

    50,000

    Second withdrawal rate (per cent)

    6.67%

    6.67%

    First threshold for those entitled to Child Tax Credit only

    14,155

    13,910

    Income disregard

    25,000

    2,500

    Child Benefit/Guardian Allowance - £ per week

    Eldest/Only Child

    17.45

    17.00

    Other Children

    11.70

    11.40

    Eldest/Only Child (Lone Parent Rate)

    17.55

    17.55

    Guardian’s Allowance

    12.50

    12.20

    Back to top

    Social Security Benefits

    Weekly Benefit

    2006-07

    2005-06

    Basic retirement pension - single person

    £84.25

    £82.05

    Basic retirement pension - married couple

    £134.75

    £131.20

    Statutory pay rates - average weekly earnings £84 (£82) or over

    Statutory Sick Pay

    £70.05

    £68.20

    Statutory Maternity Pay - first six weeks

    90% of weekly earnings

    Statutory Maternity Pay - next 20 weeks

    £108.85*

    £106.00*

    Statutory Paternity Pay - two weeks

    £108.85*

    £106.00*

    Statutory Adoption Pay - 26 weeks

    £108.85*

    £106.00*

    Jobseekers Allowance - Single Person (over 25)

    £57.45