inspire: financial management

Personal Tax Rates

Income Tax Rates

Band (£)	Rate (%)	Band (£)	Rate (%)
0 - 2150	10	0 - 2090	10
2150 - 33300	22*	2090 - 32400	22*
Over 33000	40**	Over 32400	40**

* Except dividends (10%) and savings income (20%)

** Except dividends (32.5%)

Other income taxed first, then savings income and finally dividends.

Income Tax Reliefs

(Allowances that reduce taxable income)

Personal allowance	- under 65	5035	4895
	- 65 - 74*	7280	7090
	- 75 and over*	7420	7220
Married Couple's allowance	- less than 75 and born before 06.04.35*	6065	5905
	- 75 and over*	6135	5905
	- min. amount	2350	2280
*Age allowance income limit		20100	19500
(reduce age allowance by £1 for every £2 of excess income over £20100)
Blind person's allowance		1660	1610

Tax Credits

	2006/07	2005/06
	£	£
Working Tax Credit
Basic element - Max	1665	1620
Childcare element 80% of eligible costs up to £175 per week (£300 if two or more children)
Child tax credit
Child element per child - Max	1765	1690
Family element	545	545
Baby addition	545	545
Reductions in maximum rates
37% of income above £5220* pa

* If only child tax credit is claimed, the threshold is £14155 pa. The family element of child tax credit is not reduced unless income is more than £50000pa when it is reduced by £1 for every £15 of additional income.

Pension Premiums 2006/07

• Tax relief available for personal contributions: higher of £3600 (gross) or 100% of relevant earnings.
• Employers will obtain tax relief on employer contributions if they are paid and made 'wholly and exclusively'. Tax relief for large contributions may be spread over several years.
• Any contributions in excess of £215000, whether personal or by the employer, will be subject top income tax on the individual at 40%.
• No carry back of pension contributions.

Individual Savings Accounts (ISAs)

2006/07 and 2005/06
		£
Overall investment limit	- Maxi ISA	7000
	- Mini ISA - stocks shares and life insurance	4000
	- Cash	3000

Main Social Security Benefits

Weekly Benefit		2006/07	2005/06
Basic Retirement Pension	- Single person	£84.25	£82.05
	- Married couple	£134.75	£131.20
Statutory pay rates	- average weekly earnings	£84 (£82) or over
Statutory Sick Pay		£70.05	£68.20
Statutory Maternity Pay
First Six Weeks		90% of weekly earnings
Next 20Weeks		£108.85*	£106.00*
Statutory Paternity Pay	- two weeks	£108.85*	£106.00*
Statutory Adoption Pay	- 26 weeks	£108.85*	£106.00*
* Or 90% of weekly earnings if lower

Capital Gains Tax

	2006/07	2005/06
Individuals	£	£
Exemption	8800	8500
Balance of gains (reduced by taper relief) charged as top slice of income (at savings rates - i.e. 10%, 20% or 40%)
Trusts
Exemption	4400	4250
Balance of gains (reduced by taper relief)	40%	40%

Taper relief 2006/07

Percentage relief depends on number of complete years asset owned after 05.04.98

Year of ownership	1	2	3	4	5	6	7	8	9	10
Business assets (% relief)	50	75	75	75	75	75	75	75	75	75
Non-business assets *(% relief)	0	0	5	10	15	20	25	30	35	40

*Add one extra year if asset owned before 17.03.98

Inheritance Tax

Death	Lifetime	Chargeable Transfers
Rate	Rate	2006/07	2005/06
%	%	£(000)	£(000)
Nil	Nil	0 - 285	0 - 275

Reliefs
Annual Exemption	£3000	Marriage	- Parent	£5000
			- Grandparent	£2500
			- Bride/Groom	£2500
			- Other	£1000

Reduced charge on gifts within seven years of death

Years before death	0-3	3-4	4-5	5-6	6-7
% of death charge	100	80	60	40	20

Stamp Duty and Land Tax

Land and buildings (on full consideration paid)

Rate	Residential property		Non-residential
	Disadvantaged areas	Other
	£	£	£
Nil	0-150,000	0-125,000*	0-150,000
1%	150,001 - 250,000	125,001 - 250,000	150,001 - 250,000
3%	250,001 - 500,000	250,001 - 500,000	250,001 - 500,000
4%	Over 500,000	Over 500,000	Over 500,000

*Limit raised to £125,000 (£120,000) from 23 March 2006.
Shares and securities - rate remains unchanged at 0.5%.