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Rates

Capital Gains Tax

Capital gains tax rates and bands are as follows:

Financial Year 2005/06 2004/05

Taxed as top slice of savings income

Annual Exemption

- individual £8,500 £8,200

- settlement(s) (spread over total number) £4,250 £4,100

Transfers between husband and wife living together are exempt

Chattels exemption (proceeds per item or set)
£6,000 £6,000

Taper Relief

For gains realised after 5 April 1998 by individuals or trustees, indexation allowance is frozen and the gain reduced by a tapering relief. The value of the taper relief depends on whether or not the asset is a business asset, and on the number of complete years the asset has been held after 5 April 1998 (with an additional "bonus" year for non-business assets held on 16 March 1998).

Non-Business Assets
No. of complete years held after 5 April 1998	% gain chargeable
1	100
2	100
3	95
4	90
5	85
6	80
7	75
8	70
9	65
10 or more	60

Business Assets

No of complete years held after 5 April 1998	Disposals After 5 April 2002 % of gain chargeable
0	100
1	50
2	25

Corporation Tax

Financial Year Commencing 1 April 2005 1 April 2004

Taxable profits

First £10,000 0% 0%

Next £40,000 23.75% 23.75%

Next £250,000 19% 19%

Next £1,200,000 32.75% 32.75%

On profits over £1,500,000 30% 30%

Non-corporate Distribution Rate 19% 19%

Income Tax

Tax rates	2005/06	2004/05
Starting rate band to	£2,090	£2,020
Tax rate	10%	10%
Basic rate band - next	£30,310	£29,380
Non-savings rate	22%	22%
Savings rate	20%	20%
UK dividend rate	10%	10%
Higher rate - taxable income over	£32,400	£31,400
Higher tax rate	40%	40%
UK dividend rate	32.5%	32.5%
Trusts
Tax rate	40%	40%
UK dividend rate	32.5%	32.5%
Allowances that reduce taxable income
Personal allowance (PA) under 65	£4,895	£4,745
65 to 74	£7,090	£6,830
75 and over	£7,220	£6,950
Blind person's allowance	£1,610	£1,560
Allowances that reduce tax
Married couple's allowance (MCA)
Tax reduction 71 to 74	£590.50	£572.50
75 and over	£597.50	£579.50
The age-related allowances are progressively withdrawn if income exceeds	£19,500	£18,900
Minimum PA	£4,895	£4,745
Minimum MCA tax reduction	£228	£221
Tax Shelters
Enterprise Investment Scheme (EIS) up to	£200,000	£200,000
Venture Capital Trust (VCT) up to	£200,000	£200,000
Golden Handshake max	£30,000	£30,000
Rent a Room - exempt on gross annual rent up to	£4,250	£4,250

Mileage Allowances

For Employees Using Their own means of Transport

The approved maximum tax and national insurance free mileage allowances for employees using their own transport for business are as follows:

Flat Rate	First 10,000 Miles	Miles over 10,000
Car	40p	25p
Motorcycle	24p	24p
Bicycle	20p	20p

Income Tax and NICs are due when allowances exceed these rates. Employees can claim tax relief on any shortfall. Rates of up to 5p per mile, per passenger, are also tax and NIC free when paid for the carriage of fellow employees on the same business trip.

Fuel-Only Mileage Rates

HM Revenue & Customs advisory mileage rates for employee private mileage reimbursement or employer reimbursement of business mileage from 1 July 2005 are:

	Petrol	Diesel	LPG
Up to 1400cc	10p	9p	7p
1401cc- 2000cc	12p	9p	8p
Over 2000cc	16p	13p	10p

National Insurance Contributions

Class 1 (not contracted out)	Employer	Employee
Lower earnings limit		£82
Payable on weekly earnings
£94.01 - £630	12.8%	11%
Over £630	12.8%	1%
Men 65 and over and women 60 and over	as above	Nil
Class 1A (on relevant benefits)	12.8%	Nil
Class 1B (on PAYE settlement arrangement)	12.8%
Class 2 (Self employed)	£2.10 per week
Limit of net earnings for exception	£4,345 per annum
Class 3 (Voluntary)	£7.35 per week
Class 4 (* Self employed on profits)	£4,895 to £32,760	8%
Excess over	£32,760	1%

Note

For those earning between £82 per week and £630 per week, employers receive a rebate of 1.0% on contracted out money purchase schemes or 3.5% on contracted out final salary schemes, and employees, a rebate of 1.6% for either scheme.

Value Added Tax

From	1 April 2005	1 April 2004
Standard rate	17.5%	17.5%
VAT fraction	7/47	7/47
Taxable Turnover Limits
Registration - last 12 months or next 30 days over	£60,000	£58,000
Deregistration - next 12 months under	£58,000	£56,000
Cash accounting scheme - up to	£660,000	£660,000
Optional flat rate scheme - up to	£150,000	£150,000
Annual accounting scheme - up to	£660,000	£660,000
Quarterly Return - Scale figure for private use of fuel	From 1 May 2005
Petrol	scale charge	VAT due per car
Up to 1400cc	£246	£36.64
1401cc - 2000cc	£311	£46.32
Over 2000cc	£457	£68.06
Diesel	scale charge	VAT due per car
Up to 2000cc	£236	£35.15
Over 2000cc	£300	£44.68

Main Capital Allowances

Motor Cars
On reducing balance (max. £3,000 p.a. per car)	25%
Plant and machinery
Small and medium size firms
Allowance for the first year	40%
Writing down allowance on reducing balance	25%
Large firms:
Writing down allowance only on reducing balance	25%
Long Life Assets
Allowance for first year	6%
Writing down allowance for subsequent years on reducing balance	6%
Energy Saving Technology
All firms	100%
Electric and Low Emission Cars
Registered on or after 17 April 2002	100%
Buildings
Industrial buildings and qualifying hotels	4% of building cost p.a.
Commercial/Industrial buildings in an enterprise zone	100% of building cost
Agricultural buildings	4% of building cost p.a.
Research and Development	100%

Notes

1. Capital allowances allow the cost of capital assets to be written off against taxable profits. They replace the charge for depreciation in the business accounts, which is not allowable for tax relief.

2. A small firm is defined as a business that satisfies any two of the following conditions: (a) turnover £5,600,000 or less (b) assets £2,800,000 or less (c) not more than 50 employees.

3. A medium firm is defined as a business that satisfies any two of the following conditions: (a) turnover £22,800,000 or less (b) assets £11,400,000 or less (c) not more than 250 employees.

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