Inland Revenue tax rates and allowances for 2002-03

Rates and allowances for income tax, corporation tax, capital gains tax, inheritance tax and the pension schemes earning cap are set out below.

	2001-02 (£)	2002-03 (£)	Increase (£)
Income tax allowances
Personal allowance Personal allowance for people aged 65-74 Personal allowance for people aged 75 and over	4535 5990 6260	4615 6100 6370	80 110 110
Income limit for age-related allowances	17600	17900	300
Married couple's allowance for people born before 6 April 1935 Married couple's allowance ?aged 75 or more Minimum amount of married couple's allowance	5365 5435 2070	5465 5535 2110	100 100 40
Children's tax credit Children's tax credit - baby rate	5200 -	5 290 10490	90 -
Blind person's allowance	1450	1480	30

Capital gains tax annual exempt amount: Individuals etc: Other trustees:	7500 3750	7700 3850	200 100

Inheritance tax threshold	242000	250000	8000

Pension schemes earnings cap	95400	97200	1800

Taxable bands 2001-02 (£)		Taxable bands 2002-03 (£)
Starting rate 10 per cent	0 - 1880	Starting rate 10 per cent	0 - 1920
Basic rate 22 per cent	1881 - 29400	Basic rate 22 per cent	1921 - 29900
Higher rate 40 per cent	Over 29400	Higher rate 40 per cent	Over 29900

Corporation tax profits 2001-02 (£)		Corporation tax profits 2002-03 (£)
Starting rate 10 per cent	0 - 10000	Starting rate zero	0 - 10000
Marginal relief	10001 ?50000	Marginal relief	10001- 50000
Small companies? rate 20 per cent	50001 - 300000	Small companies' rate 19 per cent	50001 ?300000
Marginal relief	300001 - 1500000	Marginal relief	< p>300001 - 1500000
Main rate 30 per cent	1500001 or more	Main rate 30 per cent	1500001 or more

The main rate of corporation tax for 2003-04 will be 30 per cent.

Notes for editors

Income tax rates and allowances

1. The rate of tax applicable to savings income in section 1A, ICTA 1988, other than dividends, is 20 per cent for income falling between the starting rate and basic rate limits. The rates of tax applicable to dividends are 10 per cent for income below the basic rate limit and 32.5 per cent above it.

2. The rate of relief for the continuing married couple's allowance and maintenance relief for people born before 6 April 1935, and for the children's tax credit, is 10 per cent.

3. As announced in Budget 2001, a baby rate of children's tax credit has been introduced from April 2002. This will mean that for these families CTC will be worth up to £1,049 in the tax year of the child's birth.

4. For 2003-04, the income tax personal allowance for those aged under 65 will be frozen. The personal allowance for those aged 65 - 74 will be increased to £6,610, and for those aged 75 or over it will be increased to £240 above statutory indexation.

Capital Gains Tax (CGT)

5. The annual exempt amount is increased to £7,700 for individuals, trustees of settlements for the disabled, and personal representatives of the estate of a deceased person, and £3,850 for other trustees. For individuals, the amount chargeable to CGT is added to the income liable to income tax and is treated as the top part of that total. CGT is charged at the following rates: below the starting rate limit at 10 per cent, between the starting rate limit and basic rate limit at 20 per cent, and above the basic rate limit at 40 per cent.

Rates for trusts

6. The rate applicable to trusts remains unchanged at 34 per cent for 2002-03 and the Schedule F trust rate remains unchanged at 25 per cent.

Inheritance tax

7. The value of estates above the threshold is taxed at 40 per cent. The threshold is being increased by £3000 more than statutory indexation. The estimated number of taxpaying estates in 2002-03 will be about 24,000. This is around 4 in 100 deaths.

Pensions schemes earnings cap

8. The main effect of the cap is to set a ceiling on the contributions that can be paid to, and the benefits that can be paid by, tax approved pension schemes. It generally applies to people who contribute to a personal pension scheme, joined an occupational scheme set up since 14 March 1989, or joined any occupational scheme from 1 June 1989 that was set up before 14 March 1989. From 6 April 2001 the cap will apply to people who contribute to stakeholder pension schemes.

Corporation tax

9. The corporation tax starting rate is reduced from 10 per cent to zero for companies with taxable profits below £10,000. The small companies? rate is reduced from 20 to 19 per cent for companies with taxable profits between £50,000 and £300,000.

10. Marginal relief eases the transition from the starting rate to the small companies? rate for companies with profits between £10,000 and £50,000. The fraction used in the calculation of this marginal relief will be 19/400. Marginal relief also applies to companies with profits between £300,000 and £1,500,000. The fraction used in the calculation of this marginal relief will be 11/400.

11. The profits limits may be reduced for a company which is part of a group or has associated companies. The lower rates and marginal reliefs do not apply to close investment holding companies.

Inland Revenue press office

Press enquiries: 020 7438 6692 / 6706 / 7327 (out of hours: 07860 359544)

Non-media enquiries: 020 7438 6420 (office hours only)

Budget 2002 Press Notices: index

Inland Revenue tax rates and allowances for 2002-03

Notes for editors

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