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HMRC have now issued further guidance on
the increase in the personal tax allowance
which is due to take effect from 7
September 2008.
The guidance is aimed at both employers
and employees. Although the increase takes
effect for pay dates from 7 September
onwards the change will effectively be
backdated for the majority of individuals
until the beginning of the tax year.
As has been widely reported the
increase in personal allowances from
£5,435 to £6,035 will mean that the
majority of basic rate taxpayers will be
£120 better off for the current tax year.
The increase is designed to compensate
those tax payers who were worse off
following the removal of the 10% starting
rate of tax from non-savings income.
Higher rate taxpayers will not be better
off following the increase in personal
allowances due to a corresponding
reduction in the point at which taxpayers
start paying the higher rate of tax of
40%.
Please get in touch if you require any
clarification of the new rules.
Internet links:
HMRC guidance
Employee guidance and
Employer guidance |
