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Rates and Allowances for 2008/09
Newsletter issue - November 07.
The tax free personal allowances that will apply from 6 April 2008 have been announced, together with the rates and thresholds for National Insurance.
The main personal allowance for those aged under 65 will be £5435. This is the tax free amount you can earn in a tax year.
The personal allowances for those aged over 65 have increased by almost 20%, but the income limit which restricts the benefit of these allowances to those with relatively low incomes has only increased by 4%. This means some retired people may believe they will receive far more income tax free from April 2008, but in reality if their pensions have increased by the rate of inflation they are unlikely to benefit.
The rates of National Insurance remain the same with slight increases in the bands the rates are applicable to. If you run your own company you can pay yourself between £4,680 and £5,435 per year from 6 April 2008 and pay no NI, but still receive a NI credit towards your state pension.
The upper thresholds for NI class 1 (paid by employees) and class 4 (paid by the self-employed) have been increased to help bring them in line with the point where the 40% rate of income tax becomes payable. This alignment will not be complete until 2009. However, this increase in the NI upper threshold means more of your wages or profits carry NI at the main rate: 11% for employees or 8% for self-employed, so you are likely to pay more NI overall in 2008/09 than in 2007/08. NI at 1% is also due on all profits or wages received above the upper thresholds. So having income such as dividends that NI does not apply to will be even more beneficial.
What our clients say about us...
"Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."
ALISTAIR FAIRWEATHER - PROGRAMME & PROJECT MANAGER, DELIVERING/RESCUING I.T. 7 BUSINESS CHANGE WITH BUDGETS UPTO £50M INC SUPPIER MANAGEMENT
"I couldn't ask for more from Paul as an Accountant. Paul has been accountant to Work Relief Charity Recruitment for just over a year now and is proving an invaluable asset. Accurate, knowledgeable, flexible with an emphasis on service delivery, I would recommend Paul's services to any organisation looking for an accounts professional."
Neil Price - Managing Director at Work Relief Charity Recruitment
"Paul was a referral from a family member when I started my business 2 years ago. As this was the first time I had ever run my own company I was totally clueless over the financial side of matters and was worried that I may have made mistakes in any of my accounting. I needn't have worried as after enaging Paul for a set monthly fee he was always there on the end of the phone for all sorts of questions I had and no matter how trivial they were Paul gave me all the information I required and more and did an excellent and painless job at the end of my first year! Couldn't ask for any better to be honest. Just two words - hire him!!!"
Lee Westrap MBCS - Director - Bulldog IT Services
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