Tax Rates 2017

ANNEX GUIDE TO

AUTUMN BUDGET 2017

 

 

 

 

2016/17

2017/18

2018/19

 

£

£

£

Income tax rates - (non-dividend income)

 

 

 

0% - starting rate for savings only note 1

Up to 5,000

Up to 5,000

 Up to £5,000

20% basic rate tax

11,001 - 43,000

11,501 – 45,000

 11,851 – 46,350

40% higher rate tax

43,001 - 150,000

45,001 to 150,000

 46,351 – 150,000

45% additional rate tax

Above 150,000

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.  The Scottish Government budget will take place on 14 December 2017.

 

 

 

 

Income tax rates – (dividend income new rules from 6/4/2016)

 

 

Dividend allowance

£5,000

£5,000

£2,000

Dividend ordinary rate (for dividends within basic rate band)

7.50%

7.50%

7.50%

Dividend upper rate (for dividends within higher rate band)

32.50%

32.50%

32.50%

Dividend additional rate (for dividends above higher rate band)

38.10%

38.10%

38.10%

 

 

 

 

Child benefit/Guardian's allowance rates

 

 

 

Higher rate (eldest child only) (per week)

20.7

20.7

 20.7

Other children

13.7

13.7

 13.7

Guardian's allowance

16.55

16.7

 17.2

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

 11,850

Dividend allowance

5,000

5,000

 2,000

Maximum Married couple’s allowance for those born before 6 April 1935 – note 3

8,355

8,445

 8,695

Married couple’s allowance – minimum amount – note 3

3,220

3,260

 3,360

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.

n/a

Allowance- 1,000

 Allowance- 1,000

Income limit – note 1

100,000

100,000

 100,000

Income limit for Married couple’s allowance- born before 6 April 1935 

27,700

28,000

 28,900

Blind person's allowance

2,290

2,320

 2,390

Rent-a-room relief

7,500

7,500

 7,500

Transferable tax allowance for married couples and civil partners – note 4

1,100

1,150

 1,185

Personal savings allowance for basic rate tax payers – note 5

1,000

1,000

 1,000

Personal savings allowance for higher rate tax payers – note 5

500

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. The individual’s married couple’s allowance is reduced by £1 for every £2 above this limit.

This transferable allowance is available to married couples and civil partners who are not in receipt of married couple’s allowance. A spouse or civil partner who is not liable to income tax; or not liable at the higher or additional rates, can transfer this amount of their unused personal allowance to their spouse or civil partner. The recipient must not be liable to income tax at the higher or additional rates.

The government will now allow claims in case where a partner has died before the claim was made. These claims will be able to be backdated up to 4 years.

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

       

National insurance

 

 

 

Lower earnings limit, primary Class 1 (per week)

112

113

 116

Upper earnings limit, primary Class 1 (per week)

827

866

 892

Apprentice upper  secondary threshold (AUST) for under 21s/ 25s

827

866

 892

Primary threshold (per week)

155

157

 162

Secondary threshold (per week)

156

157

 162

Employment allowance (per year per employer)

3,000

3,000

 3,000

Employee's primary Class 1 rate between primary threshold and upper earnings limit

12%

12%

 12%

Employee's primary Class 1 rate above upper earnings limit

2%

2%

 2%

Married woman's reduced rate between primary threshold and upper earnings limit

5.85%

5.85%

 5.85%
 

Married woman's rate above upper earnings limit

2.00%

2.00%

 2.00%

Employer's secondary Class 1 rate above secondary threshold

13.80%

13.80%

 13.80%

Class 2 rate (per week where profits are above small profits threshold)

2.80

2.85

2.95

Class 2 small profits threshold (per year)

5,965

6,025

6,205

Special Class 2 rate for share fishermen (per week)

3.45

3.5

 3.6

Special Class 2 rate for volunteer development workers

5.6

5.65

 5.80

Class 3 rate (per week)

14.1

14.25

 14.65

Class 4 lower profits limit

8,060

8,164

 8,424

Class 4 upper profits limit

43,000

45,000

 46,350

Class 4 rate between lower profits limit and upper profits limit

9.00%

9.00%

 9.00%

Class 4 rate above upper profits limit

2.00%

2.00%

 2.00%

The government had previously announced its intention to abolish “class 2” national insurance contributions (NICs) for the self-employed in April 2018, but has now said it will delay the move for a year.

 

Pensions

 

 

 

Annual allowance  note 1

40,000

40,000

 40,000

Lifetime allowance

1,000,000

1,000,000

 1,030,000

Money purchase annual allowance – note 2

10,000

4,000

 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

2,000,000

Venture Capital Trust (VCT) - maximum

200,000

200,000

200,000

Enterprise Management Incentive Scheme (EMI) - employee limit

250,000

250,000

250,000

Seed Enterprise Investment Scheme (SEIS) - maximum

100,000

100,000

100,000

Income tax relief on EIS schemes

30%

30%

30%

Income tax relief on VCT schemes

30%

30%

30%

Income tax relief on SEIS schemes

50%

50%

50%

Individual Savings Account (ISA):

 

 

 

ISA (NISA) annual limit

15,240

20,000

20,000

Junior ISA investment annual limit

4,080

4,128

4,260

Child value of Child Trust Fund annual limit

4,080

4,128

4,260

LISA- annual limit (for ages between 18 to 40)

n/a

4,000

4,000

 

 

 

 

Capital gains tax

 

 

 

Rate

 

 

 

- basic rate tax payer

10%

10%

 10%

- higher rate tax payer

20%

20%

 20%

Gain on sale of residential  property

 

 

 

- basic rate tax payer

18%

18%

18%

- higher rate tax payer

28%

28%

28%

Annual exemptions – individuals (per year)

11,100

11,300

11,700

Certain trusts for disabled persons (per year)

11,100

11,300

11,700

Other trusts (per year)

5,550

5,650

5,850

Entrepreneurs Relief lifetime limit

10,000,000

10,000,000

10,000,000

Entrepreneurs Rate

10%

10%

10%

Chattels exemption

6,000

6,000

6,000

 

 

 

 

Inheritance tax

 

 

 

Single persons nil rate band

1 - 325,000

1 - 325,000

1 - 325,000

Single persons 40% band

over 325,000

over 325,000

over 325,000

Residence nil rate band (RNRB) – maximum  -note 2

n/a

100,000

125,000

Reduced rate note 1

36%

36%

36%

IHT Rate (for chargeable lifetime transfers)

20%

20%

20%

Married couples or civil partnerships allowance nil rate band

650,000

650,000

650,000

Gifts to charities

Exempt

Exempt

Exempt

Small gifts to same person

250

250

250

General gifts- annual exemption

3,000

3,000

3,000

Wedding gifts from:

 

 

 

Parent

5,000

5,000

5,000

Grandparent/party

2,500

2,500

2,500

Other person

1,000

1,000

1,000

Business Property Relief

 

 

 

Business or interest in a business and transfer if unquoted shareholdings

100%

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.

Taxation of trusts

 

 

 

Accumulation or discretionary trusts:

 

 

 

Trust income up to £1,000 – dividend type income- note 1

7.50%

7.50%

7.50%

Trust income up to £1,000 – all other income

20%

20%

20%

Trust income over £1,000 – dividend type income

38.10%

38.10%

38.10%

Trust income over £1,000 – all other income

45%

45%

45%

Interest in possession trusts:

 

 

 

Dividend type income

7.50%

7.50%

7.50%

All other income

20%

20%

20%

 

 

 

 

Corporation tax

 

 

 

All profits and gains (excluding determination agreements and diverted profits)

20%

19%

 19%

S455 tax on all loans made by close companies to participator

32.50%

32.50%

 32.50%

Capital Allowances

 

 

 

Main writing down allowance (reducing balance)

18%

18%

18%

Special rate writing down allowance (reducing balance)

8%

8%

8%

Motor Cars- if CO2 > 75g/km but do not exceed 130g/km

18%

18%

18%

Motor Cars- if CO2 > 130g/km

8%

8%

8%

Small pool write off where WDV is £1,000 or less

100%

100%

100%

 CO2 emissions are 75g/km or less (or car is electric)

100%

100%

100%

First year allowances for certain energy-saving/water efficient products

100%

100%

 100%

Annual investment allowance

100%

100%

 100%

1  AIA level set permanently from 1 January 2016 at £200,000 pa

 

 

Research and Development Tax Credit Rates

 

 

SME Rate

230%

230%

 230%

Research and development SME payable credit

14.5%

14.5%

14.5%

Research and development expenditure credit (RDEC) scheme

11%

11%

 12%

Patent Box

 

 

 

Patent box

10%

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%

20%

Reduced rate

5%

5%

5%

Zero rate

0%

0%

0%

Flat rate of VAT on gross turnover (For Limited Cost Trader)

16.5%

16.5%

16.5%

Normal scheme registration threshold

83,000

85,000

85,000

Deregistration threshold

81,000

83,000

83,000

Cash accounting scheme  -maximum to join

1,350,000

1,350,000

1,350,000

Cash accounting scheme -  exit threshold

1,600,000

1,600,000

1,600,000

Annual accounting scheme – maximum to join

1,350,000

1,350,000

1,350,000

Annual accounting scheme – exit threshold

1,600,000

1,600,000

1,600,000

Flat rate scheme – maximum allowed to join

150,000

150,000

150,000

Flat rate scheme exit threshold

230,000

230,000

230,000

Annual Tax on Enveloped Dwellings (ATED)

 

 

 

More than £0.5m but not more than £1m

3,500

3,500

 3,600

More than £1m but not more than £2m

7,000

7,050

 7,250

More than £2m but not more than £5m

23,350

23,550

 24,250

More than £5m but not more than £10m

54,450

54,950

 56,550

More than £10m but not more than £20m

109,050

110,100

 113,400

More than £20m

218,200

220,350

 226,950

 

 

Many of the tax rates and allowances are fundamental to our business and personal lives and the main ones are summarised here. We are sure that you will find it a useful point of reference throughout the coming tax year but if you have any questions please contact us