Publications
Budget 19th February 2008
Income Tax proposals
In today’s Budget speech, the Minister for the Treasury, the Hon A R Bell MHK, announced various
financial measures.
This Practice Note contains details relating to the following:-
- Income tax allowances and rates of tax
- Class 4 National Insurance - change to limits
- Nursing Expenses - increase to prescribed limit of relief
- Personal Allowance Credit
- Age Allowance
- Benefits in Kind
- Charitable Donations
- Life Insurance Relief
- Training Relief
- Mortgage and Loan Interest Relief
1. Income Tax rates and allowances
The Minister for the Treasury announced the following changes to apply with effect from the 2008/2009
year of assessment commencing 6th April 2008. Bracketed figures are those applicable for 2007/2008:
| Personal Allowances |
£ |
£ |
| Single person |
9,200 |
(8,850) |
| Married couple (combined) |
18,400 |
(17,700) |
| Single parent addition |
6,300 |
(6,040) |
| Blind person |
2,850 |
(2,720) |
| Disabled person |
2,850 |
(2,720) |
| Co-habiting couples max addition |
6,300 |
(6,040) |
| Non-resident person |
2,120 |
(2,040) |
| Age |
2,000 |
(n/a) |
| Personal Allowance Credits |
£ |
£ |
| Lower income point |
n/a |
(6,170) |
| Upper income point |
8,670 |
(8,670) |
| Maximum credit |
500.00 |
(420.00) |
| Income tax rates - Individuals(Non-resident) |
% |
% |
| Non-resident rate on all income |
18 |
(18) |
| Income tax rates - Companies |
% |
% |
| Banking business |
10 |
(10) |
| Land & property income in Isle of Man |
10 |
(10) |
| All other companies |
0 |
(0) |
| Income tax rates - Other Non-corporates |
% |
% |
| Trusts |
18 |
(18) |
| Tax Thresholds |
% |
% |
| Single person* |
10,500 |
(10,500) |
| Married couple* |
21,000 |
(21,000) |
| Non resident |
All |
All |
* A Manx resident’s tax liability may be capped at £100,000 or £200,000 for a married couple.
| Tax Thresholds |
% |
% |
| Single person standard rate |
10 |
(10) |
| Married couple standard rate |
10 |
(10) |
| Single person higher rate |
18 |
(18) |
| Married couple higher rate |
18 |
(18) |
2. Class 4 National Insurance contributions
The rate of Class 4 Contributions are 8% and charged on profits between the lower and upper limits:-
| |
£ |
£ |
| Lower limit |
5,435 |
(5,225) |
| Upper limit |
36,140 |
(34,840) |
3. Nursing expenses
The maximum deduction for the relief in respect of nursing expenses has been increased from £8,850 to
£9,200 for the year of assessment commencing 6th April 2008.
4. Personal allowance credit
The PAC is paid to resident individuals who do not fully utilize their single or married couple’s
personal allowance. The amount of credit will be increased by 19% from £420 to £500 with effect from 5th
April 2008.
5. Age allowance
The Age Allowance is a new personal allowance for all new resident individuals who are aged 65 or over
at the start of the tax year. The amount of allowance will be £2,000 or £4,000 where both spouses are over
the age of 65 at the start of the tax year.
6. Benefits in kind
A proposal for a thoroughly updated system for the taxation of company cars and fuel provided to
employees by their employers will be published in the near future, based more on environmental impact and
aligned with the new simplified annual vehicle duty bands provided by the Department of Transport. In order
to allow businesses to prepare for this change, the new system will become operational from 6 April 2009.
7. Charitable donations
Where an individual makes qualifying charitable donations during the year they may claim relief from
income tax increasing to a maximum an individual by £1,000 to £7,000 per year.
8. Life insurance relief
Relief from income tax on any life insurance premiums paid on or after 6 April 2008 will be abolished.
Any premiums paid on or before 5 April 2008 will receive tax relief in the tax year in which they were
paid.
9. Training relief
Training relief will be abolished from 6th April 2008.
10. Mortgage and loan interest relief
Relief for mortgage and loan interest relief is capped at £15,000 per individual from 6th April 2008.