Tax Rates 2016/17

Tax Rates 2016/17

Income Tax

Allowances

2016/17 2015/16
Personal Allowance (PA)✶✝ £11,000 £10,600
Blind Person's Allowance 2,290 2,290
Dividend Tax Allowance (DTA) ✜ 5,000 N/A
Personal Savings Allowance (PSA) ✜
– Basic rate taxpayer 1,000 N/A
– Higher rate taxpayer 500 N/A

✶ PA will be withdrawn at £1 for every £2 by which 'adjusted income' exceeds £100,000. There will therefore be no allowance given if adjusted income is £122,000 or more (2015/16: £121,200).

✝ Up to 10% of the PA (2016/17: £1,100; 2015/16: £1,060) can be transferred to a spouse or civil partner who is no more than a basic rate taxpayer.

✜ The DTA taxes the first £5,000 of dividend income at nil rather than the rate that would otherwise apply – see rates below. PSA operates as a nil rate band for interest income.

Rate bands

  2016/17 2015/16
Basic rate band (BRB) £32,000 £31,786
Higher rate band (HRB) 32,001-150,000 31,786-150,000
Additional rate over 150,000 over 150,000

BRB and additional rate threshold are increased by personal pension contributions (up to permitted limit) and Gift Aid donations.

Tax rates

Rates differ for General/Savings/Dividend income

  2016/17 2015/16
  G S D G S D
Basic rate 20% 20% 7.5% 20% 20% 10%
Higher rate 40% 40% 32.5% 40% 40% 32.5%
Additional rate 45% 45% 38.1% 45% 45% 37.5%

General income (salary, pensions, business profits, rent) uses personal allowance, basic rate and higher rate bands before savings income (interest). To the extent that savings income falls in the first £5,000 of the basic rate band, it is taxed at nil rather than 20%. The PSA (see allowances above) will tax interest at nil, where it would otherwise be taxable at 20% or 40%.

Dividends are taxed as the 'top slice' of income. For 2016/17, the dividend received is taxable. In 2015/16, the dividend received was grossed up by 100/90 to determine the taxable dividend. A non-repayable tax credit equal to 10% of the taxable amount was then deductible against the income tax liability on the taxable dividend.

High Income Child Benefit Charge (HICBC)

1% of child benefit for each £100 of adjusted net income between £50,000 and £60,000.

Remittance basis charge

For non-UK domiciled individuals who have been UK resident in at least:

  2016/17 2015/16
7 of the preceding 9 tax years £30,000 £30,000
12 of the preceding 14 tax years 60,000 60,000
17 of the preceding 20 tax years 90,000 90,000


Pensions

Registered Pensions

  2016/17 2015/16
Lifetime allowance (LA) £1.00m £1.25m
Annual allowance (AA)* 40,000 40,000
LA charge if excess drawn as cash 55%/income 25%
AA charge on excess inputs 20%-45%

Annual relievable pension inputs are the higher of earnings (capped at AA) or £3,600.

*For 2016/17 the AA is usually reduced by £1 for every £2 by which relevant income exceeds £150,000, down to a minimum AA of £10,000.

State pension

  2016/17 2015/16
Single person £119.30 £115.95
Married couple 190.80 185.45
New state pension ✜ 155.65 N/A

✜Applies to those reaching state retirement age after 5 April 2016.



Annual investment limits

  2016/17 2015/16
Individual Savings Account £15,240 £15,240
Junior ISA 4,080 4,080
EIS – 30% relief 1,000,000 1,000,000
EIS eligible for CGT deferral relief Unlimited Unlimited
Seed EIS (SEIS) – 50% relief 100,000 100,000
SEIS – 50% exemption for reinvested gains 100,000 100,000
Venture Capital Trust (VCT) – 30% relief 200,000 200,000


National Insurance Contributions

Class 1 (Employees)

  Employee Employer
Main NIC rate 12.0% 13.8%
No NIC on first £155pw £156pw
Main rate* charged up to £827pw no limit
2% rate on earnings above £827pw N/A
Employment allowance per business** N/A £3,000

*Nil rate of employer NIC for employees under the age of 21 and apprentices under 25, up to £827pw.

Employer contributions (at 13.8%) are also due on most taxable benefits (Class 1A) and on tax paid on an employee′s behalf under a PAYE settlement agreement (Class 1B).

**Some businesses do not qualify, including certain sole director companies.

Class 2 (Self-employed)

Flat rate per week £2.80
Small profits threshold £5,965

Class 3 (Voluntary)

Class 3:Flat rate per week £14.10
Class 3A:Contributions vary with age

Class 4 (Self-employed)

On profits £8,061 – £43,000 9.0%
On profits over £43,000 2.0%


Vehicle Benefits

Cars

Taxable benefit: Chargeable value multiplied by chargeable %.

Chargeable value:

Initial list price of car (including most accessories), reduced by any capital contribution (maximum 5,000) by employee when the car is first made available.

Chargeable percentage:

CO2 emissions g/km Petrol Diesel
0-50 7% 10%
51-75 11% 14%
76-94 15% 18%
Above 94 Add 1% for every 5g/km
Above 200 (petrol)/ 185 (diesel) 37% maximum

Vans

Chargeable value of £3,170 (2015/16 3,150) if private use is more than home-to-work.

Fuel

Employer provides fuel for private motoring in an employer-owned:

Car:CO2-based percentage from above table multiplied by 22,200 (2015/16 22,100).

Van:598 (2015/16 594).

Employee contributions do not reduce taxable figure unless all private fuel is paid for by the employee (in which case there is no benefit charge).



Tax-free mileage allowances

Employee′s own transport per business mile
Cars first 10,000 miles 45p
Cars over 10,000 miles 25p
Business passengers 5p
Motorcycles 24p
Bicycles 20p


Capital Gains Tax

  2016/17 2015/16
Annual exemption
Individuals, estates £11,100 £11,100
Most trusts 5,550 5,550
Tax rate
Individual (to basic rate limit)* 10% 18%
Individual (above basic rate limit)* 20% 28%
Entrepreneurs′ Relief (ER)** 10% 10%
Trusts, estates* 20% 28%

*In 2016/17, individuals are taxed at 18%/28% on gains on residential property and receipt of carried interest. Trusts are taxed at 28% in these circumstances.

**ER is available for lifetime gains of up to £10m. Qualifying disposals include a trading business, shares in a trading company (from a minimum 5% holding) by an officer/employee or certain holdings by external investors. Various conditions apply.



Corporation Tax

Year to 31.3.2017 31.3.2016
Corporation Tax rate 20% 20%

Research and development relief From 1.4.2016 From 1.4.2015
SME enhanced expenditure
deduction scheme*

130%

130%
Large company enhanced expenditure
deduction scheme*

N/A

30%
Large company R&D Expenditure
Credit (RDEC) scheme**

11%

11%

*Additional deduction for qualifying R&D

**Taxable expenditure credit for qualifying R&D

SMEs that make losses can surrender the deduction to HMRC in exchange for a payment of 14.5% of the loss.

From 1 April 2016, RDEC will be the only scheme available for large companies.



Main capital allowances

Plant and machinery Limit
100% Annual Investment Allowance (AIA)
– expenditure 1.4.14* – 31.12.15 £500,000
– expenditure post 31.12.15** 200,000

* 6.4.14 for unincorporated businesses and LLPs

**Transitional rules apply for accounting periods straddling a change in AIA limit.

Other rates
– energy- and water-efficient equipment 100%
– writing down allowance: general pool (reducing balance) 18%
– writing down allowance: special rate pool (reducing balance) 8%

The special rate pool includes long life assets, integral plant in buildings, thermal insulation.

Motor cars (expenditure post 31.3.15)
CO2 emissions (g/km) Allowance
75 or less (new cars only) 100%
Up to 130 (in general pool) 18% pa
Above 130 (in special rate pool) 8% pa


Property Taxes

Annual Tax on Enveloped Dwellings (ATED)

ATED applies to 'high value' residential properties owned via a corporate structure, unless the property is used for a qualifying purpose. From 1 April 2016 the tax applies to properties valued at more than £500,000 (£1m from 1 April 2015 - 31 March 2016; £2m from 1 April 2013 - 31 March 2015).

Property value Annual charge to
  31.3.2017 31.3.2016
£0.5m –– £1m £3,500 N/A
£1m – £2m 7,000 £7,000
£2m – £5m 23,350 23,350
£5m – £10m 54,450 54,450
£10m – £20m 109,050 109,050
£20m + 218,200 218,200

Stamp Duty Land Tax (SDLT) and
Land and Buildings Transaction Tax (LBTT)

From 1 April 2015, SDLT was replaced in Scotland by LBTT. Like SDLT, it is payable by the purchaser.

Residential property (1st property only)
SDLT* Rate on band    LBTT Rate on band
£,000's %    £,000's %
Up to 125 Nil    Up to 145 Nil
125 – 250 2%    145 – 250 2%
250 – 925 5%    250 – 325 5%
925 – 1,500 10%    325 – 750 10%
Over 1,500 12%    Over 750 12%

A supplement of 3% of the total purchase price applies for both SDLT and LBTT where a second home is purchased for more than £40,000 from 1 April 2016.

*A rate of 15% applies to the total purchase price where the property is valued above £500,000 and purchased by a 'non-natural person' (e.g. a company).

Commercial property
SDLT Rate on band    LBTT Rate on band
£,000's %    £,000's %
Up to 150 Nil    Up to 150 Nil
150 – 250 2%    150 – 350 3%
Over 250 5%    Over 350 4.5%


Value Added Tax

Standard rate (1/6 of VAT-inclusive price) 20%
Registration level from 1.4.2016 £83,000 per annum
Deregistration level from 1.4.2016 £81,000 per annum

Flat rate scheme (FRS)

Annual taxable turnover to enter scheme Up to £150,000
Must leave scheme if annual taxable turnover Exceeds £230,000

If using FRS, the VAT paid by the business is a fixed percentage (based on business category) of "FRS turnover" rather than the net of output tax over input tax. Input tax is usually not recoverable.



Inheritance Tax

2016/17 2015/16
Nil rate band* £325,000 £325,000
Rate of tax above nil rate band** 40% 40%
Lifetime transfers to and from certain trusts 20% 20%

Unlimited exemption for transfers between spouses/civil partners, except if UK domiciled transferor and foreign domiciled transferee, where maximum exemption £325,000.

100% Business Property Relief (BPR) for all shareholdings in qualifying unquoted trading companies, qualifying unincorporated trading businesses and certain farmland/buildings.

100% Agricultural Property Relief (APR) available on agricultural value of qualifying farmland/buildings.

BPR or APR available at 50% on certain property.

* Up to 100% of the proportion of a deceased spouse's/civil partner's unused nil rate band may be claimed to increment the current nil rate band when the survivor dies.

** Rate reduced to 36% if at least 10% of the relevant estate is left to charity.

Reduced tax charge on gifts within 7 years before death

Years before death 0-3 3-4 4-5 5-6 6-7
% of full death tax charge payable 100 80 60 40 20

Annual exemptions for lifetime gifts include £3,000 per donor and £250 per recipient.



Key dates and deadlines

Payment dates
Self assessment 2016/17 2015/16
1st payment on account 31 January 2017 2016
2nd payment on account 31 July 2017 2016
Balancing payment 31 January 2018 2017
Capital Gains Tax 31 January 2018 2017
Other payment dates
Class 1A NIC 19 July 2017 2016
Class 1B NIC 19 October 2017 2016

Corporation taxis due 9 months and 1 day from the end of the accounting period, unless a 'large' company paying by quarterly instalments.

2015/16 Filing deadlines
Issue P60s to employees 31 May 2016
P9D, P11D, P11D(b) 6 July 2016
Self assessment tax return (SATR) paper version 31 October 2016
Online SATR if outstanding tax
to be included in 2017/18 PAYE code

30 December 2016
Online SATR 31 January 2017


Useful rates

National Minimum Wage
Rates per hour

From 1.10.16

From 1.10.15
Aged 21 and over* £6.95 £6.70
Aged 18 – 20 £5.55 £5.30
Aged 16 – 17 £4.00 £3.87
Apprentices £3.40 £3.30

*The ‘National Living Wage’ for those over 25 is £7.20 from 1 April 2016.


Child Benefit 2016/17 2015/16
First eligible child £20.70 £20.70
Each subsequent child £13.70 £13.70

You are advised to consult us before acting on any information contained herein.

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