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List of tax changes planned for 2008 and dates

Planned tax changes

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Tax system changes scheduled (changes from April 2008 except where indicated)

Income tax

1. Abolition of 10% starter rate (apart from on savings income other than dividends for those on modest incomes).
2. Reduction in basic rate from 22% to 20%.
3. Increase in personal allowances for those aged 65+, from £7,550 to £9,030, with a £10,000 level the target from 2011.
4. Payment on account threshold up from £500 to £1,000 for 2009/10 liabilities onwards.
5. Exemption from benefit-in-kind charge on overseas properties owned by individuals through their own companies (effectively in place already but to be formalised in FA 2008 following consultation).

National insurance contributions (NICs)

6. Upper earnings limit (UEL) increased from £670 pw to £770 pw, aiming for parity with the 40% income tax threshold from 2009.
7. Introducing a new 'upper accruals point', at which entitlement to state second pension stops accruing, at a similar level to the current UEL.
8. Holiday pay exemption withdrawn (from October 2007).

Investments

9. ISA limit rises from £7,000 to £7,200 with the cash component rising from £3,000 to £3,600.
10. Introduction of (non-repayable) dividend tax credit for dividends (up to £5,000) from non-UK companies. Employment

11. Fuel benefit multiplier up from £14,000 to £16,900.

Capital gains tax (CGT)

12. 18% flat rate tax.
13. Abolition of taper relief and indexation allowance.
14. Introduction of entrepreneurs' relief (£1m lifetime allowance).

Inheritance tax

15. Transferable nil rate bands for spouses/civil partners (from 9 October 2007).
16. Nil rate band rises to £312,000; then £325,000 for 2009/10 and £350,000 from April 2010.

Corporation tax (CT)

17. Main CT rate reduces from 30% to 28%. 18. Small companies' rate increases to 21% (and 22% from April 2009).
19. Increased research and development (R&D) credits to 130% (large companies) and 175% (Small and medium sized enterprise (SMEs) - subject to state aid approval).

Capital allowances

20. Industrial/agricultural/hotel buildings allowances reduce to 3%, on the way to their disappearing from 2011.
21. General rate of plant and machinery allowances reduces from 25% to 20%.
22. Long life asset rate increases from 6% to 10%.
23. 'Integral features' (as defined) qualify for 10% allowances.
24. 100% annual investment allowance on first £50,000 of expenditure.

Indirect taxes

25. Landfill tax rises from £2/£24 per tonne to £2.50/£32.
26. Aggregates levy rises from £1.60 to £1.95 per tonne.
27. Climate change levy rates up in line with inflation.
28. Vehicle excise duty rate increases.
29. Air passenger duty: standard rate for business class only flights from November 2008; change to per plane basis from November 2009.

Stamp duties (from Budget day)

30. Elimination of stamp duty where the charge would be £5 or less.
31. Simplification of SDLT notification.

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