Vertical margin of child element, whose parent has a percentage-based padding value in the same direction, is ignored and instead applied to the aforementioned parent element

Regression: Bug not present in IE7

This test case demonstrates the incorrect behaviour of IE8 RTW where the vertical margin of child element, whose parent has a percentage-based padding value in the same direction, is ignored and instead applied to the aforementioned parent element

Live Example

There should be absolutely no red in the example above

Fix

This issue can be fixed by applying a border to the containing block (to which the padding value is applied to.