Rates and Allowances


  2016/17 2017/18
  £ £
Income tax rates – (non-dividend income)
0% – starting rate for savings only note 1 Up to 5,000 Up to 5,000
20% basic rate tax 11,001 – 43,000 11,501 – 45,000
40% higher rate tax 43,001 – 150,000 45,001 to 150,000
45% additional rate tax Above 150,000 Above 150,000
1  If an individual’s taxable non-savings income exceeds the starting rate limit, then the starting rate for savings will not be available for savings income
Scottish rates of income tax                                                                                                   note 2
0% – starting rate for savings only note 1 Up to 5,000 Up to 5,000
20% basic rate tax 11,001 – 43,000 11,501 – 43,000
40% higher rate tax 43,001 – 150,000 43,001 -150,000
45% additional rate tax Above £150,000 Above £150,000
You pay the Scottish rate if you live in Scotland.
1  If an individual’s taxable non-savings income exceeds the starting rate limit, then the starting rate for savings will not be available for savings income.

2  The Scottish Parliament has voted to freeze the basic rate of income tax of 20 per cent, also freeze the higher and additional rates at 40 per cent and 45 per cent respectively, and maintain the higher rate of income tax threshold at £43,000 in 2017/18, as set out in the table above.  

 

Income tax rates – (dividend income new rules from 6/4/2016)
Up to £ 5000  note 1 and 2 0% 0%
£ 5000  – £ 32,000 7.5% 7.5%
£32,001 – £150,000 32.5% 32.5%
Above £ 150,000 38.1% 38.1%
1 From April 2016 the dividend tax credit is abolished and replaced with a new £5,000 tax-free Dividend Allowance

2 From April 2018 the allowance will be reduced to £ 2,000

Child benefit/Guardian’s allowance rates
Higher rate (eldest child only) (per week) 20.70 20.70
Other children 13.70 13.70
Guardian’s allowance 16.55 16.70
1  An income tax charge will apply to taxpayers with income exceeding £50,000 in a tax year, when child benefit is also received by them or their partner. The charge will reduce the financial benefit of receiving child benefit for those with income between £50,000 and £60,000 and remove it completely for taxpayers with income above £60,000.
Personal allowances
Personal allowance – note 2 11,000 11,500
Dividend allowance – note 5 5,000 5,000
Maximum Married couple’s allowance for those born before 6 April 1935 – note 3 8,355 8,445
Married couple’s allowance – minimum amount – note 3 3,220 3,260
Micro entrepreneurs allowance:    
Individuals making property or trading incomes below the level of the allowance would no longer need to declare or pay tax, while those who exceeded the level from their can benefit by simply deducting the allowance instead of calculating their exact expenses. For more information see ACCAs  article. n/a Allowance- 1,000
Income limit – note 1 100,000 100,000
Income limit for Married couple’s allowance- born before 6 April 1935  note 3 27,700 28,000
Blind person’s allowance 2,290 2,320
Rent-a-room relief – note 6 7,500 7,500
Transferable tax allowance for married couples and civil partners 1,100 1,150
Personal savings allowance for basic rate tax payers – note 4 1,000 1,000
Personal savings allowance for higher rate tax payers – note 4 500 500
1  This allowance is subject to the £100,000 income limit which applies regardless of the individual’s date of birth. The individual’s personal allowance is reduced where their income is above this limit. The allowance is reduced by £1 for every £2 above the limit

2  From 2016-17 onwards, all individuals will be entitled to the same personal allowance, regardless of the individuals’ date of birth. This allowance is subject to the £100,000 income limit which applies regardless of the individual’s date of birth

3  This allowance is subject to the £27,700 income limit. The individual’s married couple’s allowance is reduced by £1 for every £2 above the limit. That reduction only applies after any reduction to their personal allowance The individual’s married couple’s allowance is never reduced below the minimum amount. 

The relief for this allowance is given at 10%. 

These amounts are subject to indexation – the annual increase in CPI – and have been frozen for 2016-17 at 2015-16 levels in order to prevent any cash loss to individuals as a result of negative growth in CP

4  Basic rate tax will no longer be deducted from personal savings interest.

5  From April 2018 the allowance will be reduced to £ 2,000

The government will consult on proposals to redesign rent-a-room relief, to ensure it is better targeted to support longer-term lettings.

 

 

National insurance  
Lower earnings limit, primary Class 1 (per week) 112 113  
Upper earnings limit, primary Class 1 (per week) 827 866  
Apprentice upper  secondary threshold (AUST) for under 21s/ 25s 827 866  
Primary threshold (per week) 155 157  
Secondary threshold (per week) 156 157  
Employment allowance (per year per employer) 3,000 3,000  
Employee’s primary Class 1 rate between primary threshold and upper earnings limit 12% 12%  
Employee’s primary Class 1 rate above upper earnings limit 2% 2%  
Married woman’s reduced rate between primary threshold and upper earnings limit 5.85% 5.85%  
Married woman’s rate above upper earnings limit 2.00% 2.00%  
Employer’s secondary Class 1 rate above secondary threshold 13.80% 13.80%  
Class 2 rate (per week where profits are above small profits threshold) – note 2 2.80 2.85  
Class 2 small profits threshold (per year) – note 2 5,965 6,025  
Special Class 2 rate for share fishermen (per week) 3.45 3.50  
Special Class 2 rate for volunteer development workers 5.60 5.65  
Class 3 rate (per week) 14.10 14.25  
Class 4 lower profits limit 8,060 8,164  
Class 4 upper profits limit 43,000 45,000  
Class 4 rate between lower profits limit and upper profits limit – note 1 9.00% 9.00%  
Class 4 rate above upper profits limit 2.00% 2.00%  
1  From April 2018 the rate of NIC for self-employed will increase to 10% and from 10% to 11% with effect from 6 April 2019. 

2  From April 2018 class 2 NIC will be abolished

 
Pensions  
Annual allowance  note 1 40,000 40,000  
Lifetime allowance 1,000,000 1,000,000  
Money purchase annual allowance – note 2 10,000 4,000  
1  The Finance Bill 2015 provided that from tax year 2016/17 the annual allowance for those earning above £150,000 is to be reduced on a tapering basis so that it reduces to £10,000 for those earning above £210,000. For every £2 of income above £150,000, an individual’s annual allowance will reduce by £1.

2  This means that once a person has accessed pension savings flexibly, if they wish to make any further contributions to a defined contribution pension, tax-relieved contributions are restricted to a special money purchase annual allowance (MPAA).

 

 
Relief’s and incentives  
Enterprise Investment Scheme (EIS) – maximum 1,000,000 1,000,000  
Venture Capital Trust (VCT) – maximum 200,000 200,000  
Enterprise Management Incentive Scheme (EMI) – employee limit 250,000 250,000  
Seed Enterprise Investment Scheme (SEIS) – maximum 100,000 100,000  
Income tax relief on EIS schemes 30% 30%  
Income tax relief on VCT schemes 30% 30%  
Income tax relief on SEIS schemes 50% 50%  
Individual Savings Account (ISA):
ISA (NISA) annual limit 15,240 20,000
Junior ISA investment annual limit 4,080 4,128
Child value of Child Trust Fund annual limit 4,080 4,128
LISA- annual limit (for ages between 18 to 40) – note 1 n/a 4,000
There is a new lifetime ISA (LISA) available from April 2017, to use towards a deposit on a first home. The government will add 25% bonus to the fund as part of a help to buy scheme. Please follow this link for more details.
Capital gains tax
Rate – basic rate tax payer 10% 10%
  – higher rate tax payer 20% 20%
Gain on sale of residential  property – basic rate tax payer 18% 18%
  – higher rate tax payer 28% 28%
Annual exemptions – individuals (per year) 11,100 11,300
Certain trusts for disabled persons (per year) 11,100 11,300
Other trusts (per year) 5,550 5,650
Entrepreneurs Relief lifetime limit 10,000,000 10,000,000
Entrepreneurs Rate 10% 10%
Chattels exemption 6,000 6,000
Inheritance tax
Single persons nil rate band 1 – 325,000 1 – 325,000
Single persons 40% band over 325,000 over 325,000
Residence nil rate band (RNRB) – maximum  -note 2 n/a 100,000
Reduced rate note 1 36% 36%
IHT Rate (for chargeable lifetime transfers) 20% 20%
Married couples or civil partnerships allowance nil rate band 650,000 650,000
Gifts to charities Exempt Exempt
Small gifts to same person 250 250
General gifts- annual exemption 3,000 3,000
Wedding gifts:
From: Parent 5,000 5,000
  Grandparent/party 2,500 2,500
  Other person 1,000 1,000
Business Property Relief
Business or interest in a business and transfer if unquoted shareholdings 100% 100%
1  The estate can pay Inheritance Tax at a reduced rate of 36% on some assets if you leave 10% or more of the ‘net value’ to charity in your will.

2  The RNRB applies in addition to the existing nil rate band (NRB) or threshold (currently £325,000) if the individual and estate meet the qualifying conditions. For full guidance is available here.

Taxation of trusts
Accumulation or discretionary trusts:    
Trust income up to £1,000 – dividend type income- note 1 7.5% 7.5%
Trust income up to £1,000 – all other income 20% 20%
Trust income over £1,000 – dividend type income 38.1% 38.1%
Trust income over £1,000 – all other income 45% 45%
Interest in possession trusts:    
Dividend type income 7.5% 7.5%
All other income 20% 20%
 
Corporation tax
All profits and gains (excluding determination agreements and diverted profits) 20% 19%
S455 tax on all loans made by close companies to participator 32.5% 32.5%
Capital Allowances
Main writing down allowance (reducing balance) 18% 18%
Special rate writing down allowance (reducing balance) 8% 8%
Motor Cars- if CO2 > 75g/km but do not exceed 130g/km 18% 18%
Motor Cars- if CO2 > 130g/km 8% 8%
Small pool write off where WDV is £1,000 or less 100% 100%
 CO2 emissions are 75g/km or less (or car is electric) 100% 100%
First year allowances for certain energy-saving/water efficient products 100% 100%
Annual investment allowance 100% 100%
1  AIA level set permanently from 1 January 2016 at £200,000 pa    
2  CO2 emissions thresholds will be reduced to 50g/km for the FYA threshold and 110g/km for expenditure on business cars after 1 April 2018.
Research and Development Tax Credit Rates
SME Rate 230% 230%
Research and development expenditure credit (RDEC) scheme 11% 11%
Patent Box
Patent box 10% 10%
The Patent box regime  was phased in from April 2013 with companies able to claim the benefit of
60% for 2013/14, 70% for 2014/15, 80% for 2015/16, 90% for 2016/17 and 100% from 2017/18 onwards
VAT
Standard rate 20% 20%
Reduced rate 5% 5%
Zero rate 0% 0%
Normal scheme registration threshold 83,000 85,000
Deregistration threshold 81,000 83,000
Cash accounting scheme  -maximum to join 1,350,000 1,350,000
Cash accounting scheme –  exit threshold 1,600,000 1,600,000
Annual accounting scheme – maximum to join 1,350,000 1,350,000
Annual accounting scheme – exit threshold 1,600,000 1,600,000
Flat rate scheme – maximum allowed to join 150,000 150,000
Flat rate scheme exit threshold 230,000 230,000
Annual Tax on Enveloped Dwellings (ATED)  
More than £0.5m but not more than £1m 3,500 3,500  
More than £1m but not more than £2m 7,000 7,050  
More than £2m but not more than £5m 23,350 23,550  
More than £5m but not more than £10m 54,450 54,950  
More than £10m but not more than £20m 109,050 110,100  
More than £20m 218,200 220,350  

 

ACCA LEGAL NOTICE

This is a basic guide prepared by ACCA UK‘s Technical Advisory Service for members and their clients. It should not be used as a definitive guide, since individual circumstances may vary. Specific advice should be obtained, where necessary.