Finance Act 2008
Finance Act 2008
2008 Chapter 9
An Act to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance. 9
[21st July 2008]
Most Gracious Sovereign
We , Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty's public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and to grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
Part 1
Charges, rates, allowances, reliefs etc
Income tax
1 Charge and main rates for 2008-09
(1) Income tax is charged for the tax year 2008-09.
(2) For that tax year—
(a) the basic rate is 20%, and
(b) the higher rate is 40%.
2 Personal allowance for those aged under 65
(1) For the tax year 2008-09 the amount specified in—
(a) section 35 of ITA 2007, and
(b) section 257(1) of ICTA,
(personal allowance for those aged under 65) is replaced with ‘£6,035’.
(2) Accordingly—
(a) section 57 of ITA 2007, so far as relating to the amount specified in section 35 of that Act, and
(b) section 257C of ICTA, so far as relating to the amount specified in section 257(1) of that Act,
(indexation) do not apply for the tax year 2008-09.
(3) This section does not require a change to be made in the amounts deductible or repayable under PAYE regulations before 7 September 2008.
3 Personal allowances for those aged 65 and over
(1) For the tax year 2008-09—
(a) the amount specified in section 36(1) of ITA 2007 and section 257(2) of ICTA (personal allowance for those aged 65 to 74) is replaced with ‘£9,030’, and
(b) the amount specified in section 37(1) of ITA 2007 and section 257(3) of ICTA (personal allowance for those aged 75 and over) is replaced with ‘£9,180’.
(2) Accordingly—
(a) section 57 of ITA 2007, so far as relating to the amounts specified in sections 36(1) and 37(1) of that Act, and
(b) section 257C of ICTA, so far as relating to the amounts specified in section 257(2) and (3) of that Act,
(indexation) do not apply for the tax year 2008-09.
4 Basic rate limit
(1) In section 10 of ITA 2007 (income charged at main rates: individuals), for subsection (5) substitute—
‘(5) The basic rate limit is £34,800.
’
(2) The amendment made by subsection (1) has effect for the tax year 2008-09 and subsequent tax years.
(3) But until 7 September 2008 for the purpose of ascertaining the amounts deductible or repayable under PAYE regulations it may be assumed that the figure specified in section 10(5) of ITA 2007 for the tax year 2008-09 is £36,000.
5 Abolition of starting and savings rates and creation of starting rate for savings
(1) Section 6 of ITA 2007 (rates at which income tax is charged) is amended as follows.
(2) In subsection (1), omit paragraph (a).
(3) In subsection (2), omit ‘starting rate,’.
(4) In subsection (3), for paragraph (a) substitute—
‘(a) section 7 (starting rate for savings),
’.
(5) Accordingly, in the heading omit ‘
starting rate,
’.
(6) The amendments made by this section have effect for the tax year 2008-09 and subsequent tax years.
(7) Schedule 1 contains provision in connection with—
(a) the abolition of the starting rate and the savings rate, and
(b) the creation of the starting rate for savings.
Corporation tax
6 Charge and main rates for financial year 2009
(1) Corporation tax is charged for the financial year 2009.
(2) For that year the rate of corporation tax is—
(a) 28% on profits of companies other than ring fence profits, and
(b) 30% on ring fence profits of companies.
(3) In subsection (2) "ring fence profits" has the same meaning as in Chapter 5 of Part 12 of ICTA (see section 502(1) and (1A)).
7 Small companies' rates and fractions for financial year 2008 etc
(1) For the financial year 2008 the small companies' rate is—
(a) 21% on profits of companies other than ring fence profits, and
(b) 19% on ring fence profits of companies.
(2) For the financial year 2008 the fraction mentioned in section 13(2) of ICTA is—
(a) 7/400ths in relation to profits of companies other than ring fence profits ("the standard fraction"), and
(b) 11/400ths in relation to ring fence profits of companies ("the ring fence fraction").
(3) Subsections (3) to (7) of section 3 of FA 2007 (operation of section 13(2) of ICTA in relation to company profits consisting of both ring fence profits and other profits) apply in relation to profits of a company for an accounting period any part of which falls in the financial year 2008, or any subsequent financial year, as in relation to those for an accounting period any part of which falls in the financial year 2007.
(4) In this section "ring fence profits" has the same meaning as in Chapter 5 of Part 12 of ICTA (see section 502(1) and (1A)).
Capital gains tax
8 Rate etc
(1) In TCGA 1992, for section 4 substitute—
4 ‘Rate of capital gains tax
The rate of capital gains tax is 18%.
’
(2) Schedule 2 contains further provision for and in connection with the reform of capital gains tax.
(3) The amendment made by subsection (1) has effect for the tax year 2008-09 and subsequent tax years.
9 Entrepreneurs' relief
Schedule 3 contains provision for and in connection with entrepreneurs' relief.
Inheritance tax
10 Transfer of unused nil-rate band etc
Schedule 4 contains provisions about the transfer of unused nil-rate band between spouses and civil partners for the purposes of the charge to inheritance tax etc.
Alcohol and tobacco
11 Rates of alcoholic liquor duty
(1) ALDA 1979 is amended as follows.
(2) In section 5 (rate of duty on spirits), for ‘£19.56’ substitute ‘£21.35’.
(3) In section 36(1AA)(a) (standard rate of duty on beer), for ‘£13.71’ substitute ‘£14.96’.
(4) In section 62(1A) (rates of duty on cider)—
(a) in paragraph (a) (rate of duty per hectolitre in the case of sparkling cider of a strength exceeding 5.5 per cent), for ‘£172.33’ substitute ‘£188.10’,
(b) in paragraph (b) (rate of duty per hectolitre in the case of cider of a strength exceeding 7.5 per cent which is not sparkling cider), for ‘£39.73’ substitute ‘£43.37’, and
(c) in paragraph (c) (rate of duty per hectolitre in any other case), for ‘£26.48’ substitute ‘£28.90’.
(5) For the table in Schedule 1 substitute—
(6) The amendments made by this section are treated as having come into force on 17 March 2008.
12 Rates of tobacco products duty
(1) For the table in Schedule 1 to TPDA 1979 substitute—
‘Table
1. Cigarettes |
An amount equal to 22 per cent of the retail price plus £112.07 per thousand cigarettes |
2. Cigars |
£163.22 per kilogram |
3. Hand-rolling tobacco |
£117.32 per kilogram |
4. Other smoking tobacco and chewing tobacco |
£71.76 per kilogram |
’.
(2) The amendment made by subsection (1) is treated as having come into force at 6pm on 12 March 2008.
Fuel duties
13 Rates and rebates: simplification
(1) HODA 1979 is amended as follows.
(2) In section 1 (hydrocarbon oil), omit—
(a) subsections (3A) and (3B),
(b) in subsection (3C), ‘; and petrol is "leaded petrol" if it is not unleaded petrol’, and
(c) subsections (6) and (7).
(3) In section 6 (hydrocarbon oil: rates of duty), for subsection (1A) substitute—
‘(1A) The rates are—
(a) £0.5035 a litre in the case of unleaded petrol,
(b) £0.6007 a litre in the case of light oil other than unleaded petrol, and
(c) £0.5035 a litre in the case of heavy oil.
’
(4) In section 6AB(5) (duty on bioblend), omit the words from ‘of the description’ to the end.
(5) In section 11(1) (rebate on heavy oil), omit—
(a) in paragraph (b), ‘which is not ultra low sulphur diesel’, and
(b) paragraph (ba).
(6) In section 13AA(6) (restrictions on use of rebated kerosene), omit ‘which is not ultra low sulphur diesel or sulphur-free diesel’.
(7) Omit section 13A (rebate on unleaded petrol).
(8) In section 20AAA(4)(a) (mixing of rebated oil), for ‘section 6(1A)(d)’ substitute ‘section 6A(1A)(c)’.
(9) In section 27(1) (interpretation)—
(a) in the definition of ‘rebate’, omit ‘13A,’,
(b) omit the definitions of ‘sulphur-free diesel’, ‘sulphur-free petrol’, ‘ultra low sulphur diesel’ and ‘ultra low sulphur petrol’, and
(c) for ‘and "leaded petrol" have’ substitute ‘has’.
(10) In Article 21(7) of the Renewable Transport Fuel Obligations Order 2007 (S.I. 2007/3072
), for ‘sulphur-free petrol’ substitute ‘unleaded petrol’.
(11) In consequence of this section, omit—
(a) in FA 1987, section 1(2) and (3),
(b) in FA 1997, section 7(5)(a) and (b) and (8)(b),
(c) in FA 2000, section 5(3),
(d) in FA 2001, section 2(1), and
(e) in FA 2004, section 7(2), (5) to (7) and (8)(a).
(12) The amendments made by this section are...
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