Income Tax & National Insurance Changes

• Personal allowance up to £5,435.00
• Basic rate band increases to give a new higher rate tax threshold of £36,000
• Upper threshold for primary National Insurance up to £40,040 from £34,840

The following changes have also been implemented for future years

• Basic rate income tax to reduce from 22% to 20% from 6th April 2008
• 10% starting rate band to be abolished for earned income (and pensions) from 6th April 2008
• Upper threshold for primary National Insurance Contributions to increase by £ 3,900 more than inflation for 2008-2009
• Personal allowances for taxpayers aged 75 or more is now £9,180.00
• Higher rate Income Tax threshold to increase by £800 more than inflation for 2009-2010
• Upper threshold for primary National Insurance to be aligned with the point at which taxpayers begin to pay higher rate Income Tax from 6th April 2009.

Other Changes

• The Capital Gains Tax annual exemption increases from £9,200 to £9,600 and a flat rate of 18% now applies to disposals post 06 April 2008.
  
• The Inheritance Tax is now £312,000 increasing to £325,000 in 2009/21010 and £350,000 in 2010/2011. A percentage of this allowance may also be transferable between spouses and civil partners.
• The 10% dividend tax credit currently applying to UK dividends is to apply to foreign dividends also from 6th April 2008. The credit is withdrawn, however, if the recipient owns 10% or more of the paying company's shares or receives foreign dividends totalling more than £5,000 in the year.
• The National Minimum Wage increases to £5.52 per hour from October 2007.
• A new tax penalty regime is to be introduced from 2009.
• From 2008, the self-assessment filing deadline will be brought forward to 3st October for paper returns, but remains 31st January for returns filed online.
• Businesses are to be forced to file tax returns and pay tax liabilities online. These measures will affect PAYE from 2009, VAT from 2010 and Corporation Tax from 2011.
• The annual investment limits for Individual Savings Accounts ('ISA's') will increase to £3,600 for cash and £7,200 for shares and securities (also the overall limit) from 6th April 2008.
• Late elections to treat 'pre-owned assets' as still being in the donors estate, thus avoiding the Income Tax charge, are to be allowed.