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Tax Rates

Income Tax rates and allowances

Income Tax allowances table
Income Tax allowances 2014-15 2015-16 2016-17
Personal Allowance for people born after 5 April 1948 (1) £10,000 £10,600 £11,000
Income limit for Personal Allowance £100,000 £100,000 £100,000
Personal Allowance for people born between 6 April 1938 and 5 April 1948 (1) (2) £10,500 £10,600 £11,000
Personal Allowance for people before 6 April 1938 (1) (2) £10,660 £10,660 £11,000
Married Couple's Allowance (born before 6th April 1935 and aged 75 and over) (2) (3) £8,165 £8,355 £8,355
Income limit for the allowances for those born before 6 April 1948 £27,000 £27,700 £27,700
Minimum amount of Married Couple's Allowance £3,140 £3,220 £3,220
Marriage Allowance (4) N/A £1,060 £1,100
Blind Person's Allowance £2,230 £2,290 £2,290
  1. The Personal Allowance reduces where the income is above £100,000 - by £1 for every £2 of income above the £100,000 limit. This reduction applies irrespective of age.
  2. These allowances reduce where the income is above the income limit by £1 for every £2 of income above the limit. The Personal Allowance for people born before 6 April 1948 can be reduced below the basic Personal Allowance where the income is above £100,000.
  3. Tax relief for the Married Couple's Allowance is given at the rate of 10 per cent.
  4. Marriage allowance is available to married couples and civil partners 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 rate, can transfer this amount of their personal allowance to their spouse. The recipient must not be liable to income tax at the higher or additional rate.

Other Allowances

Other Allowances 2014-15 2015-16 2016-17
Personal Savings Allowance - Basic Rate (1) N/A N/A £1,000
Personal Savings Allowance - Higher Rate (1) N/A N/A £500
Dividend Allowance (2) N/A N/A £5,000
  1. From 6 April 2016, UK tax is no longer deducted at source from bank and other interest. Instead, the first £1,000 of interest for a basic rate taxpayer is tax free. For higher rate taxpayers, the tax free allowance is reduced to £500
  2. From 6 April 2016 the dividend tax credit is replaced by a new tax-free Dividend allowance. Any dividend income above this allowance is taxable at 7.5 percent/32.5 percent or 38.1 percent, depending on rate band

Income Tax rates and taxable bands

Income Tax rates and taxable bands
Rate 2014-15 2015-16 2016-17
Starting rate for savings: 10%/0% (1) (2) £0-£2,880 £0-£5,000 £0-£5,000
Basic rate: 20% (3) £0-£31,865 £0-£31,785 £0-£32,000
Higher rate: 40% (3) £31,866-£150,000 £31,786-£150,000 £32,001-£150,000
Additional rate: 45% (3) Over £150,000 Over £150,000 Over £150,000

(1) The 10 per cent starting rate applies to savings income only. If, after deducting your Personal Allowance from your total income liable to Income Tax, your non-savings income is above this limit then the 10 per cent starting rate for savings will not apply. Non-savings income includes income from employment, profits from self-employment, pensions, income from property and taxable benefits.

(2) WEF 2015-16, the starting rate for savings is zero percent.

(3) The rates available for dividends are the 7.5 per cent ordinary rate (within Basic rate band), the 32.5 per cent dividend upper rate (within Higher rate) and the dividend additional rate of 38.1 per cent.

National Insurance Contributions

National Insurance contributions - rates and allowances
£ per week 2014-15 2015-16 2016-17
Lower earnings limit, primary Class 1 £111 £112 £112
Upper earnings limit, primary Class 1 £805 £815 £827
Upper accrual point £770 £770 N/A
Primary threshold £153 £155 £155
Secondary threshold £153 £156 £156
Employees' primary Class 1 rate between primary threshold and upper earnings limit 0.12 0.12 0.12
Employees' primary Class 1 rate above upper earnings limit 0.02 0.02 0.02
Class 1A rate on employer provided benefits (1) 0.138 0.138 0.138
Employees' contracted-out rebate (for contracted-out salary related schemes only) 0.014 0.014 N/A
Married women's reduced rate between primary threshold and upper earnings limit 0.0585 0.0585 0.0585
Married women's rate above upper earnings limit 0.02 0.02 0.02
Employers' secondary Class 1 rate above secondary threshold 0.138 0.138 0.138
Employers' contracted-out rebate, salary-related schemes 0.034 0.034 N/A
Class 2 rate £2.75 £2.80 £2.80
Class 2 small earnings exception £5,885 N/A N/A
Class 2 small profits threshold N/A £5,965 £5,965
Special Class 2 rate for share fishermen £3.40 £3.45 £3.45
Special Class 2 rate for volunteer development workers £5.55 £5.60 £5.60
Class 3 rate £13.90 £14.10 £14.10
Class 4 lower profits limit £7,956 £8,060 £8,060
Class 4 upper profits limit £41,865 £42,385 £43,000
Class 4 rate between lower profits limit and upper profits limit 0.09 0.09 0.09
Class 4 rate above upper profits limit 0.02 0.02 0.02
Additional primary Class 1 percentage rate on deferred employments 0.02 0.02 0.02
Additional Class 4 percentage rate where deferment has been granted 0.02 0.02 0.02
  1. Class 1A NICs are payable in July and are calculated on the value of taxable benefits provided in the previous tax year, using the secondary Class 1 percentage rate appropriate to that tax year.

Corporation Tax rates

Rates for financial years starting on 1 April
Rate 2014 2015 2016
Small profits rate* 20%* 20%* 20%*
Small profits rate can be claimed by qualifying companies with profits at a rate not exceeding £300,000 N/A N/A
Marginal Relief Lower Limit £300,000 N/A N/A
Marginal Relief Upper Limit £1,500,000 N/A N/A
Standard fraction 1/400 N/A N/A
Main rate of Corporation Tax* 21%* 20%* 20%*
Special rate for unit trusts and open-ended investment companies 20%* 20%* 20%*

Main rate of Corporation Tax

The main rate of Corporation Tax applies when profits (including ring fence profits) are at a rate exceeding £1,500,000, or where there is no claim to another rate, or where another rate does not apply.

In addition to the rates set out in the above table, the main rate of Corporation Tax for 2016 is set at 20 per cent. The small profits rate will be unified with the main rate, so from 1 April 2015 there will be only one Corporation Tax rate for non-ring fence profits - set at 20 per cent.

*For companies with ring fence profits (income and gains from oil extraction activities or oil rights in the UK and UK Continental Shelf) these rates differ. The small profits rate of tax on those profits is 19 per cent and the ring fence fraction is 11/400 for financial years starting 1 April 2013, 2014 and 2015. The main rate is 30 per cent for financial years starting on 1 April 2013, 2014 and 2015.

Corporation Tax on chargeable gains

Indexation Allowance allows for the effects of inflation when calculating the chargeable gains of companies or organisations.

Capital Gains Tax rates and annual tax-free allowances

Each tax year nearly everyone who is liable to Capital Gains Tax gets an annual tax-free allowance - known as the 'Annual Exempt Amount'. You only pay Capital Gains Tax if your overall gains for the tax year (after deducting any losses and applying any reliefs) are above this amount.

Tax-free allowances for Capital Gains Tax

The annual tax-free allowance (known as the Annual Exempt Amount) allows you to make a certain amount of gains each year before you have to pay tax.

Nearly everyone who is liable to Capital Gains Tax gets this tax-free allowance.

There's one Annual Exempt Amount for:

  • most individuals who live in the UK
  • executors or personal representatives of a deceased person's estate
  • trustees for disabled people

Most other trustees get a lower Annual Exempt Amount.

Customer group 2014-15 2015-16 2016-17
Individuals, personal representatives and trustees for disabled people £11,000 £11,100 £11,100
Other trustees £5,500 £5,550 £5,550

You can use your Annual Exempt Amount against the gains charged at the highest rates to minimise the tax you owe. See the section on 'Rates for Capital Gains Tax' below for an example.

Executors and personal representatives

If you're acting as an executor or personal representative for a deceased person's estate, you may get the full Annual Exempt Amount during the 'administration period'. You are entitled to the Annual Exempt Amount for the tax year in which the death occurred and the following two tax years. After that there's no tax-free allowance against gains during the administration period.

Trustees for disabled people

If you're acting as a trustee for a disabled person you use the higher Annual Exempt Amount above - and not the rate for 'other trustees'.

A disabled person in this context is a person who has mental health problems or receives the middle or higher rate of Attendance Allowance or Disability Living Allowance.

People who are 'non-domiciled' in the UK

You won't get the Annual Exempt Amount if you're 'non-domiciled' in the UK and you've claimed the 'remittance basis' of taxation on your foreign income and gains (unless you are dual resident in the UK and the double taxation agreement between the UK and the other country in which you are resident allows it to be claimed).

You may be 'non-domiciled' in the UK, for example, if you were born in another country and intend to return there.

You may have claimed the 'remittance basis' if you have income and gains from abroad and have decided that it's beneficial to be taxed on the foreign income and gains that you bring into the UK, rather than on all income and gains that arise.

Issues of domicile and tax on foreign gains are complicated. For example, the above rules may not apply if your unremitted income is less than £2,000. A lot depends on the facts of each case. You can find out more by following the link below. Or speak to your Tax Office about your specific circumstances.

Rates for Capital Gains Tax

Residential Property and carried Interest

  2014-15 2015-16 2016-17
Residential Property: Individuals - Basic rate band 18% 18% 18%
Residential Property: Individuals - Higher rate band 28% 28% 28%
Residential Property: Trustees & Personal Representatives 28% 28% 28%

Other

  2014-15 2015-16 2016-17
Other Assets: Individuals - Basic rate band 18% 18% 10%
Other Assets: Individuals - Higher rate band 28% 28% 20%
Other Assets: Trustees & Personal Representatives 28% 28% 20%
Gains qualifying for Entrepreneurs Relief 10% 10% 10%

Working out your Capital Gains Tax

Whilst Trustees and Personal Representatives pay CGT at the above flat rates, an Individual needs to work out their total taxable income before working out which Capital Gains Tax rate to use.

  1. First work out your taxable income by deducting any tax-free allowances and reliefs that you are entitled to.
  2. Next see how much of your basic rate band is already being used against your taxable income. The basic rate band for 2016-17 is £32,000.
  3. Allocate any remaining basic rate band first against gains that qualify for Entrepreneurs' Relief - these are charged at 10 per cent.
  4. Next allocate any remaining basic rate band against your gains (other than residential property of carried interest), these are charged at 10 per cent.
  5. Next allocate any remaining basic rate band against your gains (other than residential property of carried interest), these are charged at 18 per cent.
  6. Any remaining gains above the basic rate band are charged at 20 or 28 per cent, depending on asset type.

Using your Annual Exempt Amount

If you have gains which are charged at different rates, you need to decide how to use your Annual Exempt Amount. You use it against the gains charged at the highest rates to minimise the tax you owe

Rates and Allowances - Inheritance Tax

  2014-15 2015-16 2016-17
Nil Rate Band (1) £325,000 £325,000 £325,000
Gross rate on death 40% 40% 40%
Reduced rate on death (2) 36% 36% 36%
Lifetime transfer rate 20% 20% 20%

(1) any Nil Rate Band which is unused on a person's death can be transferred to the surviving spouse or civil partner

(2) A reduced rate of 36% applies where at least 10% of the net estate is left to a registered charity

Stamp Duty Land Tax rates and thresholds

Stamp Duty Land Tax (SDLT) is charged on land and property transactions in the UK. The tax is charged at different rates and has different thresholds for different types of property and different values of transaction.

The tax rate and payment threshold can vary according to whether the property is in residential or non-residential use, and whether it is a freehold or leasehold. SDLT relief is available for certain kinds of property or transaction.

This guide provides an overview of the SDLT rates and provides links to related guidance where necessary.

SDLT rates for residential property

The table below applies for all freehold residential purchases and transfers and the premium paid for a new lease or the assignment of an existing lease. (If the property will be used for both residential and non-residential purposes the rates differ - please see the section 'SDLT for non-residential or mixed use property').

Residential land or property SDLT rates and thresholds
Band of consideration (1) Rate
£0 - £125,000 0%
£125,001 - £250,000 2%
£250,001 to £925,000 5%
£925,001 to £1,500,000 10%
Over £1,500,001 12%
'Non-natural persons' (2) (3) 15%

(1) Rates are charged on the portion of consideration that falls within each band

(2) 'Non-natural person' includes companies, partnerships and collective investment schemes

(3) Rate applies to total consideration where consideration exceeds £500,000. Where consideration is £500,000 or less, then the normal banding above applies (0% on first £125,000, etc.)

(4) With effect from 1 April 2016, a higher rate of an additional 3% is applied where you own more than one residential property

SDLT on rent - new residential leasehold purchase

When a new residential lease has a substantial annual rent, SDLT is payable on both of the following, which are calculated separately and then added together:

  • the lease premium (purchase price) - see the table above
  • the 'net present value' (NPV) of the rent payable

The NPV is based on the value of the total rent over the life of the lease and can be worked out using HMRC's online calculator (link below).

Net present value of rent - residential SDLT rate
£0 - £125,000 Zero
Over £125,000 1% of the value that exceeds £125,000
If six or more residential properties form part of a single transaction

If six or more properties form part of a single transaction the rules, rates and thresholds for non-residential properties apply. The amounts paid for all the properties in the transaction must be added together in order to establish the rate of tax payable.

SDLT rates for non-residential or mixed use properties

Non-residential property includes:

  • commercial property such as shops or offices
  • agricultural land
  • forests
  • any other land or property which is not used as a dwelling
  • six or more residential properties bought in a single transaction

A mixed use property is one that incorporates both residential and non-residential elements.

The table below applies for freehold and leasehold non-residential and mixed use purchases and transfers.

If the transaction involves the purchase of a new lease with a substantial annual rent, there may be additional SDLT charge to that shown below, based on the rent. See the later section and table for more detail.

Non-residential land or property rates and thresholds
Purchase price/lease premium or transfer value (non-residential or mixed use) SDLT rate
Up to £150,000 - annual rent is under £1,000 Zero
Up to £150,000 - annual rent is £1,000 or more 0.01
Over £150,000 to £250,000 0.01
Over £250,000 to £500,000 0.03
Over £500,000 0.04

Note that for the above purpose the annual rent is the highest annual rent known to be payable in any year of the lease, not the net present value used to determine any tax payable on the rent as described below.

SDLT on rent - new non-residential or mixed use leasehold purchase

When a new non-residential or mixed use lease has a substantial annual rent, SDLT is payable on both of the following which are calculated separately and then added together:

  • the lease premium or purchase price - see the table above
  • the net present value of the rent payable (this is based on the value of the total rent over the life of the lease and can be worked out using HMRC's online calculators)
SDLT on rent for new leasehold properties (non-residential or mixed use)
Net present value of rent - non-residential SDLT rate
£0 - £150,000 Zero
Over £150,000 1% of the value that exceeds £150,000

Using the HMRC SDLT online calculators

HMRC has developed online calculators which work out the amount of SDLT payable on residential, non-residential and mixed transactions in land and property.

Go to HMRC's SDLT calculators