2004/05 Tax Guide

Income Tax

Tax rates		Note	2004/05	2003/04
Starting rate band to			£2,020	£1,960
Tax rate			10%	10%
Basic rate band - next			£29,380	£28,540
Non-savings rate			22%	22%
Savings rate			20%	20%
UK dividend rate			10%	10%
Higher rate - taxable income over			£31,400	£30,500
Higher tax rate			40%	40%
UK dividend rate			32.5%	32.5%
Trusts
Tax rate			40%	34%
UK dividend rate			32.5%	25%
Allowances that reduce taxable income
Personal allowance (PA)	under 65	1	£4,745	£4,615
	65 to 74	1,3	£6,830	£6,610
	75 and over	1,3	£6,950	£6,720
	Blind person's allowance		£1,560	£1,510
Allowances that reduce tax
Married couple's allowance (MCA)
Tax reduction	70 to 74	1,2,3	£572.50	£556.50
	75 and over	1,2,3	£579.50	£563.50
The age-related allowances are progressively withdrawn if income exceeds			£18,900	£18,300
Minimum PA			£4,745	£4,615
Minimum MCA tax reduction			£221	£215
Tax Shelters
Enterprise Investment Scheme (EIS) up to		4	£200,000	£150,000
Venture Capital Trust (VCT) up to		5	£200,000	£100,000
Golden Handshake max.			£30,000	£30,000
Rent a Room - exempt on gross annual rent up to			£4,250	£4,250

Notes

Ages are as the end of the tax year. Ages for the MCA relate to the elder of husband or wife.

MCA is available only to those couples where at least one spouse was born before 6 April 1935.

The higher rates of personal allowances are reduced by £1 for each £2 of excess income over £18,900 (2003/04 £18,300) until the basic allowance is reached. Similar limits apply to the married couple's allowance: the loss of tax reduction is 10p for each £2 of excess income (only the husband's income is taken into account) until the minimum of £221 (2003/04 £215) is reached.

Subscription for new ordinary shares - 20% income tax relief. Also such investments by subscription are eligible for deferral of capital gains tax on unlimited gains re-invested.

Did you know?

That the Government expects to raise £127.8 billion from income tax, an increase of more than 7% compared with the last tax year.



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