INLAND REVENUE TAX RATES AND ALLOWANCES FOR 2001-02

7 Mar 2001 12:00 AM

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

2000-01 (#) 2001-02 (#) Increase (#) Income tax allowances

Personal allowance 4385 4535 150 Personal allowance for people aged 65-74 5790 5990 200 Personal allowance for people aged 75 and over 6050 6260 210

Income limit for age-related allowances 17000 17600 600

Married couple''s allowance for people born before 6 April 1935 5185 5365 180 Married couple''s allowance - aged 75 or more 5255 5435 180 Minimum amount of married couple''s allowance 2000 2070 70

Children''s tax credit - 5200 -

Blind person''s allowance 1400 1450 50

Capital gains tax annual exempt amount:

Individuals etc 7200 7500 300 Other trustees 3600 3750 150

Inheritance tax threshold 234000 242000 8000

Pension schemes earnings cap 91800 95400 3600

Taxable bands 2000-01 (#) Taxable bands 2001-02 (#)

Starting rate 10% 0-1520 Starting rate 10% 0-1880 Basic rate 22% 1521-28400 Basic rate 22% 1881-29400 Higher rate 40% Over 28400 Higher rate 40% Over 29400

Corporation tax Corporation tax profits 2000-01 (#) tax profits 2001-02 (#)

Starting rate 10% 0-10000 Starting rate 10% 0-10000 Marginal relief 10001-50000 Marginal relief 10001-50000 Small companies'' Small companies'' rate 20% 50001-300000 rate 20% 50001-300000 Marginal relief 300001-1500000 Marginal relief 300001-1500000 Main rate 30% 1500001 or more Main rate 30% 1500001 or more

The main rate of corporation tax for 2002-03 will be 30 per cent.

NOTES FOR EDITORS

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 the Pre-Budget Report, personal allowances for those aged 65 or over will be increased by #240 over indexation in 2003-04. The new levels will then be increased by reference to the rise in earnings for the rest of the next Parliament.

Capital gains tax (CGT)

4. The annual exempt amount is increased to #7,500 for individuals, trustees of settlements for the disabled, and personal representatives of the estate of a deceased person, and #3,750 for other trustees. The amount chargeable to CGT is added onto the top of income liable to income tax for individuals and is charged to CGT at these rates: below the starting rate limit at 10 per cent, between the starting rate and basic rate limits at 20 per cent, and above the basic rate limit at 40 per cent.

Rates for trusts

5. The rate applicable to trusts remains unchanged at 34 per cent for 2001-02 and the Schedule F trust rate remains unchanged at 25 per cent.

Inheritance tax

6. The value of estates above the threshold is taxed at 40 per cent. The estimated number of taxpaying estates in 2001-02 will be about 23,000, broadly the same as the expected out-turn for 2000-01. This is around 4 in 100 of all deaths.

Pension schemes earnings cap

7. 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, which 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

8. 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 for calculating this marginal relief will be one fortieth. Marginal relief also applies to companies with profits between #300,000 and #1,500,000. The fraction for calculating this marginal relief will also be one fortieth.

9. The starting rate and the small companies'' rate do not apply to close investment holding companies.

INLAND REVENUE PRESS OFFICE

Media enquiries to: 020 7438 6692 / 6706 / 7327 (out of hours: 07860 359544)

Non-media enquiries to: 020 7438 6420 / 6425 (Office hours only)

Inland Revenue information is on the Internet: www.inlandrevenue.gov.uk