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 UK Budget 2002 - Related Government Press Releases
REV 2

April 17 2002

CLICK HERE FOR BUDGET 2006-2007

 

(See the full text of the Chancellor's speech here!)


INLAND REVENUE TAX RATES AND ALLOWANCES FOR 2002-03

Rates and allowances for income tax, corporation tax, capital gains
tax, inheritance tax and the pension schemes earning cap are set out
below :


 




---------------------------------------------------------------------
                                 2001-02 (#) 2002-03 (#) Increase (#)
Income tax allowances
---------------------

Personal allowance                     4 535       4 615           80

Personal allowance                     5 990       6 100          110
for people aged 65-74

Personal allowance                     6 260       6 370          110
for people aged 75 and over

Income limit for                      17 600      17 900          300
age-related allowances

Married couple's allowance for         5 365       5 465          100
people born before 6 April 1935

Married couple's allowance             5 435       5 535          100
- aged 75 or more

Minimum amount of                      2 070       2 110           40
married couple's allowance

Children's tax credit                  5 200       5 290           90

Children's tax credit - baby rate          -      10 490            -

Blind person's allowance               1 450       1 480           30


Capital gains tax annual exempt amount:
---------------------------------------
    Individuals etc:                   7 500       7 700          200

    Other trustees:                    3 750       3 850          100

Inheritance tax threshold            242 000     250 000         8000
-------------------------

Pension schemes earnings cap          95 400      97 200         1800
----------------------------
---------------------------------------------------------------------



---------------------------------------------------------------------
Taxable bands 2001-02 (#)              Taxable bands 2002-03 (#)

Starting rate          0 - 1 880       Starting rate        0 - 1 920
10 per cent                            10 per cent

Basic rate        1 881 - 29 400       Basic rate      1 921 - 29 900
22 per cent                            22 per cent

Higher rate          Over 29 400       Higher rate        Over 29 900
40 per cent                            40 per cent

---------------------------------------------------------------------

Corporation tax profits                       Corporation tax profits
2001-02 (#)                                               2002-03 (#)

Starting rate         0 - 10 000       Starting rate       0 - 10 000
10 per cent                            zero

Marginal relief         10 001 -       Marginal relief       10 001 -
                          50 000                               50 000

Small companies' rate   50 001 -       Small companies' rate  50001 -
20 per cent              300 000       19 per cent            300 000

Marginal relief        300 001 -       Marginal relief      300 001 -
                       1 500 000                            1 500 000

Main rate              1 500 001       Main rate            1 500 001
30 per cent              or more       30 per cent            or more

---------------------------------------------------------------------

 




 


The main rate of corporation tax for 2003-04 will be 30 per cent.

NOTES

Income tax rates and allowances

1. The rate of tax applicable to savings income in section 1A, ICTA 1988, other than dividends, is 20 per cent for income falling between the starting rate and basic rate limits. The rates of tax applicable to dividends are 10 per cent for income below the basic rate limit and 32.5 per cent above it.

2. The rate of relief for the continuing married couple's allowance and maintenance relief for people born before 6 April 1935, and for the children's tax credit, is 10 per cent.

3. As announced in Budget 2001, a baby rate of children's tax credit has been introduced from April 2002. This will mean that for these families CTC will be worth up to #1,049 in the tax year of the child's birth.

4. For 2003-04, the income tax personal allowance for those aged under 65 will be frozen. The personal allowance for those aged 65 - 74 will be increased to #6,610, and for those aged 75 or over it will be increased to #240 above statutory indexation. Capital Gains Tax (CGT)

5. The annual exempt amount is increased to #7,700 for individuals, trustees of settlements for the disabled, and personal representatives of the estate of a deceased person, and #3,850 for other trustees. For individuals, the amount chargeable to CGT is added to the income liable to income tax and is treated as the top part of that total. CGT is charged at the following rates: below the starting rate limit at 10 per cent, between the starting rate limit and basic rate limit at 20 per cent, and above the basic rate limit at 40 per cent. Rates for trusts

6. The rate applicable to trusts remains unchanged at 34 per cent for 2002-03 and the Schedule F trust rate remains unchanged at 25 per cent. Inheritance tax

7. The value of estates above the threshold is taxed at 40 per cent. The threshold is being increased by #3000 more than statutory indexation. The estimated number of taxpaying estates in 2002-03 will be about 24,000. This is around 4 in 100 deaths. Pensions schemes earnings cap

8. The main effect of the cap is to set a ceiling on the contributions that can be paid to, and the benefits that can be paid by, tax approved pension schemes. It generally applies to people who contribute to a personal pension scheme, joined an occupational scheme set up since 14 March 1989, or joined any occupational scheme from 1 June 1989 that was set up before 14 March 1989. From 6 April 2001 the cap will apply to people who contribute to stakeholder pension schemes. Corporation tax

9. The corporation tax starting rate is reduced from 10 per cent to zero for companies with taxable profits below #10,000. The small companies' rate is reduced from 20 to 19 per cent for companies with taxable profits between #50,000 and #300,000.

10. Marginal relief eases the transition from the starting rate to the small companies' rate for companies with profits between #10,000 and #50,000. The fraction used in the calculation of this marginal relief will be 19/400. Marginal relief also applies to companies with profits between #300,000 and #1,500,000. The fraction used in the calculation of this marginal relief will be 11/400.

11. The profits limits may be reduced for a company which is part of a group or has associated companies. The lower rates and marginal reliefs do not apply to close investment holding companies.

GOVERNMENT DEPARTMENT INTERNET SITES

Further information and all published documents relating to Budget 2002 may be found on the Internet at the following addresses:

HM Treasury
www.hm-treasury.gov.uk

Inland Revenue
www.inlandrevenue.gov.uk

HM Customs and Excise
www.hmce.gov.uk



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last modified: April 17, 2002