HM REVENUE AND
CUSTOMS News Release issued by COI News Distribution Service. 2
September 2008
HM Revenue &
Customs (HMRC) has issued a reminder about this month's
change to the 2008/09 basic personal income tax allowance.
The change, announced by the Chancellor in May 2008, will mean
most people under 65 who pay tax at the basic rate will see an
extra £60 in their first pay packet on or after 7 September, and a
£10 increase in their take-home pay each month after that until
next April. Those paid weekly will get £53 the first time the
increased allowance is used, and then receive £2.30 extra a week
until April. The exact increases depend on how much tax they have
already paid in 2008/09.
For most people the change is straightforward; their employer or
pension provider will make all the necessary changes to their tax
code. They will not have to do anything and don't need to
contact HMRC.
For other groups, the following applies:
* Anyone who only pays tax through Self Assessment, such as the
self-employed, will have the new allowance taken into account in
their tax calculation for 2008/09;
* Individuals where HMRC does not have full information on their
tax affairs will get a weekly or monthly increase from September
and will get the benefit of the backdated increase once they are
taxed on a normal basis or when their tax liability for 2008/09 is
finally calculated after April 2009.
* Higher rate taxpayers will continue to pay the same amount of tax
* Budget 2007 significantly increased the personal allowance for
those aged over 65. Therefore most individuals aged 65 are
unaffected by this change. However, those individuals over 65 who
did not get the full Personal Age Allowance because of the level
of their income will get the benefit of the revised Personal Allowance.
Further details of how the changes affect people are available by
visiting the HMRC website at http://www.hmrc.gov.uk and
clicking the 'Extra Personal Allowance for 2008/09' link.
Notes to editors
1. Around 40 million tax code numbers for those individuals under
the age of 65 will change in September. This follows the increase
in the basic Personal Allowance for 2008/09 by £600 to £6,035.
This was announced by the Chancellor in May and included in this
year's Finance Act. The Chancellor also announced that the
increased allowance should only go to individuals who pay all
their tax at basic rate. So, to make sure that this happens, the
basic rate limit for 2008/09 has been reduced by £1,200 to
£34,800. This will have the effect of leaving existing higher rate
taxpayers paying the same amount of tax as they were before the changes.
2. The new tax codes must be applied by employers on the first
pay day on or after 7 September 2008. The majority of the codes
will be changed automatically by employers who will only get a
small number of individual notifications of changed codes and most
people will not get a revised notice of coding (P2).
Issued by HM Revenue & Customs Press Office
Website http://www.hmrc.gov.uk