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INCOME TAX RATES 2005-2006

Taxable income	Rate
Ł	%
1 - 2,090	10
2,091 - 32,400	22*
32,401 upwards	40**

* Except dividends (10%) and savings income (20%).
** Except dividends (32.5%).
Other income taxed first, then savings income and finally dividends.

PERSONAL ALLOWANCES

	Ł
Personal allowance	4,895
-(Age 65 -74)	7,090
-(Age 75 or over)	7,220
Married couple's allowance
-(Age 65 before 6 April 2000)	5,905
-(Age 75 or over)	5,975

If income exceeds Ł19,500 age-related allowances are reduced by 50% of the excess subject to an abatement ceiling.

The married couple's allowance, additional personal allowance and relief for maintenance payments are withdrawn from 2000-2001 and widow's bereavement allowance is withdrawn for new claimants.

From 2000-2001 the age-related married couple's allowances and maintenance payments relief are restricted to those couples where one partner was born before 6 April 1935.

RETIREMENT ANNUITIES/PERSONAL PENSIONS

Retirement annuity premiums (RAPs) and personal pension contributions (PPCs) are tax deductible up to a maximum percentage of 'net relevant earnings'. Where an individual pays both PPCs and RAPs, maximum allowable PPCs are reduced by qualifying RAPs and given relief in the tax year.

Age at beginning of tax year 2005-2006	RAP	*PPC
	%	%
35 or less	17.5	17.5
36 - 45	17.5	20.0
46 - 50	17.5	25.0
51 - 55	20.0	30.0
56 - 60	22.5	35.0
61 - 75	27.5	40.0

*There is an earnings cap of Ł105,600 for tax relief for PPCs.

TAX CREDITS

	2005/06 £	2004/05 £
Working Tax Credit (WTC)
Basic element - max.	1,620	1,570
Childcare element 70% of eligible costs to a max. of £175 (£135) per week (£300 (£200) if two or more children)
Child Tax Credit (CTC)
Child element per child - max.	1,690	1,625
Family element	545	545
Baby addition	545	545

Reductions in maximum rates 37% of income above £5,220*(£5,060)p.a.

*If only CTC is claimed, the threshold is £13,910 p.a. (£13,480). The family element of CTC is not reduced unless income is more than £50,000 p.a. when it is reduced by £1 for every £15 of additional income.

CAR AND FUEL BENEFITS

Company cars 2005/06
CO₂ emissions (g/km) (round down to nearest 5g/km)	% of car’s list price taxed	Fuel benefit (£14,400 x %)
up to 140	15	2,160
145	16	2,304
150	17	2,448
155	18	2,592
160	19	2,736
165	20	2,880
170	21	3,024
175	22	3,168
180	23	3,312
185	24	3,456
190	25	3,600
195	26	3,744
200	27	3,888
205	28	4,032
210	29	4,176
215	30	4,320
220	31	4,464
225	32	4,608
230	33	4,752
235	34	4,896
240 and above	35	5,040

Company cars

For diesel cars add a 3% supplement, but maximum still 35%. Until 5.4.06 supplement waived for Euro IV diesels.
Discounts apply to certain environmentally friendly cars.
For cars registered before 1.1.98 charge is based on engine size.
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

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.

Van benefit per vehicle
Vehicles under 4 years old £500	Vehicles at least 4 years old £350
Notes 1. The age is determined at the end of the tax year. 2. Van benefits include fuel for private use.

INLAND REVENUE APPROVED MILEAGE RATE

Miles	Pence per Mile
Cars and vans
up to 10,000	40p
over 10,000	25p
Additional passenger 5p per mile.
Bicyles	20p
Motorcycles	24p

CORPORATION TAX

Band
Rate

Starting rate 0 - 10,000
0%*

Marginal starting rate 10,001 - 50,000
23.75%

Small companies rate 50,001 - 300,000
19%

Marginal small companies rate 300,001 - 1,500,000
32.75%

Full rate over 1,500,001
30%

Starting rate fraction
19/400

Small companies rate fraction
11/400

The small companies' and starting rates are not available to 'close investment-holding companies'.

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

*With effect from 1 April 2004, minimum rate of 19% will apply when profits are distributed to non-company shareholders.

CAPITAL ALLOWANCES

	Writing Down Allowance
Plant and Machinery*	25%#(reducing balance)
Motor Cars**	25% (reducing balance) - £3,000 max
Industrial and Agricultural Buildings and Hotels	4% (straight line)
For small businesses: first year allowances (FYAs) of 50% for 12 months from 6.4.04 (1.4.04 for companies). FYAs of 40% from 6.4.05 (1.4.05 for companies). For medium-sized businesses: FYAs of 40%. For all businesses: 100% FYAs on expenditure on energy saving plant and machinery. *100% FYAs on new cars with CO2 emissions not exceeding 120 gm/km until 31.3.08. #6% on certain long life assets.

CAPITAL GAINS TAX
EXEMPTIONS AND RELIEFS

	Ł
Annual exempt amount	8,500

Balance of gains (reduced by taper relief) charged as top slice of income (at savings rates - ie 10%, 20% or 40%)

BUSINESS TAPER RELIEF

Percentage relief depends on number of complete years asset owned after 5.4.98.Add one extra year if asset owned before 17.3.98.

Number of whole years in qualifying holding period	Percentage of gain chargeable %
0 - 1	50
over 2	25

NON-BUSINESS TAPER RELIEF

Percentage relief depends on number of complete years asset owned after 5.4.98.Add one extra year if asset owned before 17.3.98.

Number of whole years in qualifying holding period	Percentage of gain chargeable %
1	0
2	95
3	95
4	90
5	85
6	80
7	75
8	70
9	65
10	60

INHERITANCE TAX

	Transfers on death	Lifetime transfers
Gross cumulative transfer	Gross rate of tax
	%	%
Transfers on or after 6 April 2005
Ł1 - Ł275,000	Nil	Nil
Ł275,001 upwards	40	20

Estate on death taxed as top slice of cumulative transfers in the seven years before death. Most lifetime transfers (other than to discretionary trusts) are potentially exempt, only becoming chargeable where death occurs within seven years.

EXEMPTIONS	Ł
Annual	3,000
Small gift	250
Marriage :
- Parent	5,000
- Grandparent	2,500
- Bride/groom	2,500
- Other	1,000

TAPER RELIEF
Transfers on or within seven years of death are chargeable, but the tax is tapered as follows:

Years between gift and death	% of full charge
0 - 3	100
3 - 4	80
4 - 5	60
5 - 6	40
6 - 7	20

NATIONAL INSURANCE CONTRIBUTIONS

Class 1 primary: Up to £94 per week £94.01 to £630 per week over £630 per week	NIL* Employee 11% Employer 12.8% Employer £58.96 + 1%*. Employer 12.8%*
* Entitlement to contribution-based benefits retained for earnings between £82.01 and £94 per week. On earnings above £94. * On earnings above £630.
Class 1A: rate	12.8%
Rate on other taxed benefits in kind	12.8%
Class 1B: rate	12.8%
Class 2: Main rate	Ł2.10 per week
SEE limit	Ł4,345 per annum
Class 3:	Ł7.35 per week
Class 4: Annual lower profits limit	Ł4,895
Annual upper profits limit	Ł32,760
Rate	8%
1% on profits over £32,760.

VALUE ADDED TAX

Standard rate	17.5%
Reduced rate	5%
Annual registration limit	Ł60,000
Deregistration limit	£58,000
VAT fraction	7/47

VAT on private fuel - scale charge due per quarter per car for accounting periods beginning on or after 1 May 2005.

	Petrol		Diesel
	Charge £	VAT £	Charge £	VAT £
Up to 1400cc	246	36.64	236	35.15
1401 - 2000cc	311	46.32	236	35.15
Over 2000cc	457	68.06	300	44.68

MAIN SOCIAL SECURITY BENEFITS

		Weekly Benefit
		2005/06	2004/05
Basic retirement pension	- single person	£82.05	£79.60
	- married couple	£131.20	£127.25

Statutory pay rates - average weekly earnings £82 (£79) or over
Statutory Sick Pay		£68.20	£66.15
Statutory Maternity Pay
- first six weeks		90% of weekly earnings
- next 20 weeks		£106.00*	£102.80*
Statutory Paternity Pay - two weeks		£106.00*	£102.80*
Statutory Adoption Pay - 26 weeks		£106.00*	£102.80*
* Or 90% of weekly earnings if lower

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