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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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