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Pre-Budget Report 2008 - Compensation for the loss of 10% band made permanent

Alistair Darling, in his second Pre Budget Report, has announced that the measures introduced in September as compensation for the removal of the 10% tax rate will be made permanent.

Initially the compensation, given by means of an, over inflation, increase in personal allowances of £600 was to last for only one year. It has now been announced that the increase will be permanent and in fact will be increased by a further £130 from next April. The basic personal allowance will be £6,475.

The point at which higher rate tax becomes payable is also increased by more than inflation (£800) to £37,400.

However, it is not all good news – from April 2010, those who have income of over £100,000, will have the personal allowances gradually restricted so that only basic rate relief is obtained and if the income exceeds £140,000 the allowances will be further restricted until extinguished.

As mentioned elsewhere, from April 2011 those with income over £150,000 will be liable at a top rate of 45%



Date: 25th November, 2008
Author: Liz Cuthbertson


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