| 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.
|
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| 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 |
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| 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 | |||
|
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| 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 6 The government will consult on proposals to redesign rent-a-room relief, to ensure it is better targeted to support longer-term lettings.
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| 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 |
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| 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).
|
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| 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 | ||||||||
| 1 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. |
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| 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% | ||||||||
|
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| 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.