Budget 2008: modernising the personal tax system - May 2008
From 6th April 2008
From 2008-09, the basic rate of income tax will be reduced to 20%. The 20% savings rate will be merged with the basic rate.
The existing 10% starting rate will be abolished. A new 10% starting rate for savings will be introduced.
These changes reduce the main rates of income tax to two: the basic rate and the higher rate.
Age-related personal allowances for those aged 65 to 74 and 75 and over will be increased by £1,180 above indexation. For 2008-09, the age-related allowance for someone aged 65 to 74 will be £9,030 and the age-related allowance for someone aged 75 or over will be £9,180.
The basic personal allowances increased by indexation to £5,435 for 2008-09. (The Chancellor's recent announcement is still to be confirmed).
There is no change to the 40% higher rate. There are no changes to the 10% dividend ordinary rate or the 32.5% dividend upper rate.
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