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Income Tax rates

Income Tax rates for the tax year 2007-2008 remain unchanged, but the tax bands have increased in line with indexation.

£ per year	2006-07	2007-08
Starting rate: 10%	£0-£2,150	£0-£2,230
Basic rate: 22%	£2,151-£33,300	£2,231-£34,600
Higher rate: 40%	Over £33,300	Over £34,600

The Chancellor also announced that he would remove the starting rate and cut the basic rate of income tax from 22 pence to 20 pence from April 2008, creating a simpler structure of two rates: a 20 pence basic rate and a 40 pence higher rate.

Income Tax personal allowances

All income tax allowances will increase in line with inflation. The personal allowance will increase to £5,225. The age-related personal allowances will rise to £7,550 for people aged between 65 and 74 and to £7,690 for those aged 75 and over.

£ per year (unless stated)	2006-07	Change	2007-08
Personal allowance (age under 65)	£5,035	+£190	£5,225
Personal allowance (age 65-74)	£7,280	+£270	£7,550
Personal allowance (age 75 and over)	£7,420	+£270	£7,690
Married couple's allowance (aged less than 75 and born before 6th April 1935)	£6,065	+£220	£6,285
Married couple's allowance (age 75 and over)	£6,135	+£230	£6,365
Married couple's allowance - minimum amount	£2,350	+£90	£2,440
Income limit for age-related allowances	£20,100	+£800	£20,900
Blind person’s allowance	£1,660	+£70	£1,730

National Insurance contributions

National insurance contribution (NIC) rates and thresholds for 2007-08 were announced in the 2006 Pre-Budget Report. The starting point for employers’, employees’ and self-employed NICs in 2007-08 will increase in line with inflation to £100 per week. NICs are not paid on earnings or profits below this amount. The upper earnings and profits limits for NICs will increase from April 2007 in line with inflation from £645 to £670 per week.  For the self-employed, the rate of Class 2 contributions will increase to £2.20 per week.

£ per week (unless stated)	2006-07	Change	2007-08
Lower earnings limit, primary Class 1	£84	+£3	£87
Upper earnings limit, primary Class 1	£645	+£25	£670
Primary threshold	£97	+£3	£100
Secondary threshold	£97	+£3	£100
Class 2 rate (per week)	£2.10	+£0.10	£2.20
Class 2 small earnings exception	£4,465 per year	+£170	£4,635 per year
Special Class 2 rate for share fishermen (per week)	£2.75	+£0.10	£2.85
Special Class 2 rate for volunteer development workers	£4.20	+£0.15	£4.35
Class 3 rate (per week)	£7.55	+£0.25	£7.80
Class 4 lower profits limit	£5,035 per year	+£190	+£5,225 per year
Class 4 upper profits limit	£33,540 per year	+£1,300	£34,840 per year

• National Insurance

Alcohol and tobacco duty rates

From 26 March 2007 duties on alcohol will be:

Product	Effect of tax on typical item (increase in pence)	Typical unit
Beer	1p	pint of beer
Wine	1p	175 ml glass
Wine	5p	75cl bottle
Sparkling wine	7p	75cl bottle
Spirits	0p	70cl bottle
Spirits-based (ready to drink)	0p	275ml bottle
Cider	1p	litre
Sparkling cider	5p	75cl bottle

  From 6pm on 21 March 2007, tobacco duty rates will be:

Product	Duty	Effect of tax on typical item (increase in pence)	Typical unit
Cigarettes	22 per cent of the retail price plus £108.65 per thousand cigarettes	11p	packet of 20
Cigars	£158.24 per kilogram	4p	packet of 5
Hand-rolling tobacco	£113.74 per kilogram	11p	25g
Other smoking tobacco and chewing tobacco	£69.57 per kilogram	7p	25g of pipe tobacco

Stamp taxes and duties - Transfers of land and buildings

Rate	Residential in disadvantaged areas	Residential outside disadvantaged areas	Non-residential
	Total value of consideration
Zero	£0 ‑ £150,000	£0 ‑ £125,000	£0 ‑ £150,000
1%	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
4%	Over £500,000	Over £500,000	Over £500,000

• Stamp Duty

Capital Gains Tax and Inheritance Tax

Capital gains tax

The capital gains tax (CGT) annual exempt amount is increased in line with statutory indexation to £9,200 for the tax year 2007-08 for individuals, personal representatives of deceased persons and trustees of certain settlements for the disabled. The annual exempt amount for most other trustees is increased to £4,600.

Every husband, wife, civil partner and child has his or her own £9,200 annual exempt amount.

The amount chargeable to CGT is added to the individual’s income liable to income tax and treated as the top part of that total. For 2007-2008, CGT up to the starting rate limit will be charged at 10 per cent, between the starting rate and basic rate limits at 20 per cent, and above the basic rate limit at 40 per cent.

Inheritance Tax

As announced in Budgets 2005 and 2006, the inheritance tax nil-rate band allowance will be increased by more than statutory indexation to £300,000 for the tax year 2007-08, £312,000 for 2008-09 and £325,000 for 2009-10. The value of estates over and above the nil-rate band is taxed at 40 per cent. The estimated number of taxpaying estates in 2007-08 will be about 35,000 - this is around 6 in 100 deaths.

To continue to provide a fair and targeted system, with certainty for families, the Government can now announce that it will increase the nil-rate band allowance to £350,000 in 2010-11.

Fuel duties

Main fuel duty rates will increase by 2 pence per litre from 1 October 2007.  Rebated oils rates will also increase by 2 pence per litre from 1 October, to maintain the cash differential with main rates.  Changes to rates for biofuels, Compressed Natural Gas and Liquefied Petroleum Gas in 2007-08 will be made in line with previous Budget commitments.

Pence per litre (unless stated)	Old duty rate	Change	New duty rate
Ultra-low sulphur petrol/diesel	48.35p	+2p	50.35p
Sulphur-free petrol/diesel	48.35p	+ 2p	50.35p
Biodiesel	28.35p	+2p	30.35p
Bioethanol	28.35p	+ 2p	30.35p
Liquefied petroleum gas used as road fuel	12.21p per kg	+ 4.28p per kg	16.49p per kg
Natural gas used as road fuel	10.81 per kg	+ 2.89p per kg	13.70p per kg
Rebated gas oil (red diesel)	7.69p	+ 2p	9.69p
Fuel Oil	7.29p	+ 2p	9.29p

Vehicle Excise Duty

Vehicle Excise Duty for private vehicles (registered from March 2001)

£ per year VED band	CO2 (g/km)	Change (Alt fuel/Petrol/Diesel)	Alternative Fuel cars	Petrol cars	Diesel cars
A	100 and below	-	£0	£0	£0
B	101 to 120	-£15 / -£5 / -£15	£15	£35	£35
C	121 to 150	£5 / £15 / £5	£95	£115	£115
D	151 to 165	£5 / £15 / £5	£120	£140	£140
E	166 to 185	£5 / £15 / £5	£145	£165	£165
F	186 to 225	£10 / £15 / £10	£190	£205	£205
G*	226 and above	£85 / £90 / £85	£285	£300	£300

Band G applies to vehicles registered from 23 March 2006.

Vehicle Excise Duty for private vehicles (registered before March 2001)

£ per year	Change	New rate
1549cc and below	+£5	£115
above 1549cc	+£5	£180

Vehicle Excise Duty for motorcyclists 

£ per year	Change	New rate
150cc and below	-	£15
151-400cc	+£1	£32
401-600cc	+£1	£47
above 600cc	+£2	£64

• How to tax your vehicle

Useful links

• Summary details of the Budget from the Treasury Opens new window

• Detailed information from the Treasury Opens new window