2008-09 tax year starts today

The 2008-09 tax year begins today, with loud cries of protest over the abolition of the 10% tax rate ringing in the Government's ears. Technically speaking, the 10 tax rate still exists, but only for "savings income", i.e. interest and similar income. Employment and pension income will be taxed, initially at 20%, and then at 40%.

The basic rate is reduced from 22% to 20%, however, this is small comfort to the lower earners who will be hit hard by the loss of the 10% rate.

Will the Government change its mind, and keep the 10% rate after all? Not such a far-fetched idea; this is, after all, a Government whose tax policy consists of blunders and U-turns. The Finance Bill is currently going through Parliament, so until it receives Royal Assent in mid-July, anything is possible.