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2008/09 rates now announced

2008/09 Income tax allowances

Personal allowances Note 2008/09 Increase £
Under 65 1 £5,435 +£210
65 to 74 1,3 £9,030 +£1,480
75 and over 1,3 £9,180 +£1,490
Blind person's allowance   £1,800 +£70
Allowances that reduce tax
Married couple's allowance (MCA)      
Tax reduction age 74 1,2,3 £653.50 +£25
  75 and over 1,2,3 £662.50 +£26
The age-related allowances are progressively withdrawn if income exceeds   £21,800 +£900
Minimum PA   £5,435 +£210
Minimum MCA tax reduction   £254 +£10
Pension scheme allowances (as already announced)
Annual allowance   £235,000 +£10,000
Lifetime allowance   £1,650,000 +£50,000

Notes

  1. Ages are as the end of the tax year. Ages for the MCA relate to the elder of spouse or civil partner.
  2. MCA is available only to those couples where at least one spouse or civil partner was born before 6 April 1935.
  3. The higher rates of personal allowances are reduced by £1 for each £2 of excess income over £21,800 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 until the minimum of £254 is reached. (For couples married before 5 December 2005, only the husband's income is taken into account. For those married on or after 5 December 2005 or in a civil partnership, only the higher earner's income is taken into account

2008/09 National Insurance contributions

Class 1 (not contracted out) Employer Employee
Lower earnings limit   £90
Payable on weekly earnings    
£105.01 to £770 12.8% 11%
Over £770 12.8%  
Employers' class 1 rate above £770 1%  
Men 65 and over and women 60 and over as above Nil
Employees' contracted-out rebate 1.6%
Married women's reduced rate between £105 and £770 4.85%
Employers' contracted-out rebate, salary-related schemes 3.7%
Employers' contracted-out rebate, money purchase schemes 1.4%
Class 1A (on relevant benefits) 12.8% Nil
Class 1B (on PAYE settlements) 12.8%  
Class 2 (Self employed) £2.30 per week
Class 2 contributions - share fishermen £2.95 per week
Class 2 contributions for volunteer development workers £4.50 per week
Limit of net earnings for exception £4,825 per annum
Class 3 (Voluntary) £8.10 per week
Class 4 (* Self employed on profits)  
£5,435 to £40,040 8%
Excess over £40,040 1%
*Exemption applies if state retirement age was reached by 6 April 2008.
Maximum contributions payable  
Class 1 or Class 1 & 2 £3,876.95 + 1% of earnings over £770
Class 2 and Class 4 £2,890.30 + 1% of profits over £40,040 a year
Self employed: Class 4 increase compared to 2007/08 (up to upper profits limit) £404.50 (16.3%)

Notes

  1. For those earning between £90 per week and £770 per week, employers receive a rebate of 1.4% on contracted out money purchase schemes or 3.7% on contracted out final salary schemes, and employees, a rebate of 1.6% for either scheme.
  2. For children under 16, men over 65 and women over 60 there are no national insurance contributions payable, but employers' contributions remain payable.

2008/09 Tax credits

2008/09 Increase
Basic Element £1,800 +£70
Couple and lone parent element £1,700 +£70
30 hour element £735 +£30
Disabled worker element £2,405 +£95
Severe disability element £1,020 +£40
50+ return to work payment (16-29 hours) £1,235 +£50
50+ return to work payment (30+ hours) £1,840 +£70
Childcare element of Working Tax Credit
Maximum eligible cost for one child £175 p.w None
Maximum eligible cost for two or more children £300 p.w None
Percentage of eligible costs covered 80%  
Child Tax Credit
Child Tax Credit family element £545 None
Family element, baby addition £545 None
Child element £2,085 +£240
Disabled Child element £2,540 +£100
Severely disabled child element £1,020 +£40
Income Thresholds and Withdrawal Rate
First income threshold £6,420 +£1,200
First withdrawal rate 39% +2%
Second income threshold £50,000 None
Second withdrawal rate 6.67% None
First threshold for those entitled to Child Tax Credit only £15,575 +£1,080
Income disregard £25,000 None

2008/09 State pension and pension credit

Weekly Benefits
  2008/09 Change
Basic Retirement Pension
Single person £90.70 +£3.40
Married couple £145.05 +£5.45
Pension Credit
Standard single minimum guarantee £124.05 +£5.00
Standard couple minimum guarantee £189.35 +£7.65