Income Tax The threshold at which no income tax becomes payable has increased from £4,745 to £4,895 for those aged under 65. The rise for 65 to 74 year olds was from £6,830 to £7,090 and from £6,950 to £7,220 for those 75 and over. Income tax relief for married couples (where one was born before 6 April 1935) will also include same sex couples joined through civil partnerships with effect 5 December 2005, following the introduction of the Civil Partnerships Act 2004.
The threshold for the 10% starting rate tax was increased from £2,020 to £2,090 and the basic rate band threshold (of 20% on savings income and 22% on other income) was extended from £29,380 to £30,310. Higher rate tax at 40% is now only payable on income over £32,400, after allowances. The recently introduced Pre Owned Assets Tax is charged at the income tax rates mentioned above.
This is a tax generally levied on people that give away assets to others but still continue to enjoy significant benefits from that asset. With effect 6 April 2005 any employee provided with a company van may be exempt from tax, as it may no longer be deemed by the Inland Revenue as a benefit in kind. If the employee drives to and from work in the van and only occasionally uses it for private use e.g. taking rubbish to the tip once in a while or just visiting the newsagent on the way to work, the van will no longer be deemed as a benefit in kind. This saves the employee income tax and the employer Class 1A National Insurance.
If the employee regularly uses the van for personal use the benefit in kind rules still apply. The amount of income a person over the age of 65 can earn without their higher personal allowance being reduced has increased from £18,900 to £19,500.