Change to 2008-09 Tax Bands

Following extensive media coverage and political pressure, on 13 May 2008 the Chancellor announced changes to the personal allowance and tax bands for the 2008-09 tax year. The changes are as follows:

 

·        an increase in the personal allowance of £600, from £5,435 to £6,035; and

·        a reduction in the basic rate limit of £1,200, from £36,000 to £34,800.

 

These changes mean that basic rate taxpayers will benefit by £120 per tax year whilst the position of higher rate taxpayers will be unchanged.

It is expected that the changes will not take effect for employees until September 2008.