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INCOME TAX & PERSONAL SAVINGSINCOME TAX RATESAs announced in the November 1999 Pre-Budget Statement, the basic rate of income tax is to be reduced to 22% with effect from 6 April 2000. Also announced in November was the extension of the 10% starting rate of income tax to savings income - backdated to 6 April 1999. Rates for 2000/01 are:
PERSONAL ALLOWANCESThe standard married couple's allowance (MCA) is to be abolished with effect from 6 April 2000. MCA continues to be available to those couples in which at least one spouse is aged 65 or over on 5 April 2000. Rates announced for 2000/01 are as follows:
ISA LIMITSThe Chancellor announced that the annual limit on investment in ISAs, due to be reduced from 6 April 2000, will instead be frozen for 2000/01. Up to £7,000 can be invested in ISAs in 1999/00 and in 2000/01:
PENSIONSIt is proposed that the earnings cap for occupational and personal pension schemes is increased from 6 April 2000 from £90,600 to £91,800.
EMPLOYEE SHARE SCHEMESIn addition to the new all-employee share scheme and enterprise management incentives scheme - which will be starting later this year, and which are covered in detail here - the Chancellor announced a number of changes affecting existing employee share schemes. First, no changes are proposed to the rules for SAYE Sharesave and the Company Share Option Plan. Approved profit sharing schemes can continue to 5 April 2002, but employers must then move to another scheme to qualify for tax breaks. The Chancellor also announced that the Government is considering legislation to allow some flexibility in the arrangements for payment of NICs on unapproved share option gains.
COMPANY CAR TAXATIONAs mentioned in our company car section, it is proposed to introduce from April 2002 a new scheme of taxing company cars, based on carbon dioxide emissions. It was announced that for 2002/03, the basic charge for cars emitting 165 grams of CO2 (or less) per kilometer will be 15% of the car's list price, and that the percentage will rise in steps of 1% for every additional 5g/km to a maximum of 35%. Most diesel cars will be subject to a 3% supplement, although the same maximum of 35% will apply. The level of CO2 emissions qualifying for the minimum charge will be reduced - to 155g/km for 2003/04 and to 145g/km for 2004/05. The existing rules for business mileage and cars over 4 years old will, at the same time, be abolished. Consultations will take place regarding the treatment of particularly environmentally friendly cars, such as those running on electricity. On the basis that such cars may have emissions well below those required for the minimum charge, and that they may be more expensive to buy, it is proposed that some discount will be introduced.
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