2008 Pre-Budget Report (PBR)
Personal Tax, Child Benefit and Tax Credit
Changes before April 2009
The increase in Child Benefits will be paid from 5 January 2009 instead
of 6 April 2009. The new amounts will be £20.00 per week for the
first or only child and £ 13.20 per week for subsequent children
Changes from April 2009
The basic personal allowance for 2008-09 of £6,035 will increase
by indexation £310 plus a further £130 to £6,475 from
6 April 2009. This is equal to a weekly amount of tax free income of £125.
The basic rate of income tax (20 per cent and higher rate 40 per cent
) remain unchanged, but the basic rate tax band is increased by indexation
plus an additional £800 from £34,800 to £37,400.
All other personal allowances, the income limit for age-related allowances,
the minimum amount of married couple’s allowance and the starting
rate limit for savings will be increased by indexation.
The child element of the Child Tax Credit will increase by £75
above indexation from April 2009. This includes the extra £25 which
has been brought forward from April 2010.
Working Tax Credits and Guardians Allowance are being increased in
line with indexation from April 2009.
Changes from April 2010
The amount of basic personal allowance has not been set, but from 6
April 2010 the allowance will be subject to income limits of £100,000
and £140,000.
This will mean that where an individual’s income is below the
£100,000 income limit, they will continue to be entitled to the
full allowance.
Where an individual’s income is above the income limit of £100,000,the
allowance will be reduced by £1 for every £2 above the income
limit up to a maximum of one half of the basic personal allowance.
Where an individual’s gross income is above a second income limit
of £140,000, the amount of their allowance will be further reduced
by £1 for every £2 above the income limit up to a maximum
of the full amount of the basic personal allowance.
Changes from April 2011
From 6 April 2011 taxable non-savings and savings income above £150,000
will be liable to income tax at a new rate 45 per cent.
Dividends otherwise taxable at the new 45 per cent rate will be liable
to income tax at a new rate of 37.5 per cent and the trust rate will also
increase to 45 per cent.
The main rate of Class 1 and Class 4 National Insurance contributions
will be increased by 0.5 per cent to 11.5 per cent and 8.5 per cent respectively.
The Class 1 employer rate of National Insurance contributions will
be increased by 0.5 per cent to 13.3 per cent. The increased rate will
also apply to Class 1A and Class 1B contributions.
The additional rate of Class 1 and 4 National Insurance contributions
will be increased by 0.5 per cent to 1.5 per cent.
