Pre-Budget Report 2008: personal tax

24 November 2008

Just as the Chancellor’s temporary tax cuts came as no surprise, so too his announcement of plans to raise taxes in the future to help reduce extra levels of government borrowing were not unexpected.

As from April 2011, Class1 and Class 4 NICs are to be increased by 0.5 per cent.

Also as from April 2011, taxpayers earning more than £150,000 a year will pay an increased tax rate of 45 per cent.

The personal allowances – income on which no tax is paid – of high earners are also to change in order to bring the benefit in line with that of basic rate taxpayers.

As from April 2010, those on incomes of between £100,000 and £140,000 will see their personal allowances reduced by half. For those earning more than £140,000, the allowance will be dropped.

The increase in the income tax personal allowance of £120 a year for basic rate taxpayers is to be made permanent and to be raised to £145 in April for those under 65.

The personal tax allowance increases to £6,475, and the basic rate tax limit to £37,400 from April 2009.