Tax Rates 2017/18

Tax Rates 2017/18

Income Tax

Main allowances

Main allowances 2017/18 2016/17
Personal Allowance (PA)*† £11,500 £11,000
Blind Person's Allowance 2,320 2,290
Rent a room relief ** 7,500 7,500
Trading income ** 1,000 N/A
Property income ** 1,000 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*PA will be withdrawn at £1 for every £2 by which ‘adjusted income’ exceeds £100,000.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 £123,000 or more (2016/17: £122,000).

† 10% of the PA (2017/18: £1,150; 2016/17: £1,100) can be transferred to a spouse or civil partner who is no more than a basic rate taxpayer.

** If gross income exceeds this limit, the limit may be deducted instead of actual expenses.

Rate Bands 2017/18 2016/17
Basic rate band (BRB) £33,500 £32,000
Higher rate band (HRB) 33,501-150,000 32,001-150,000
Additional rate over 150,000 over 150,000
Scottish taxpayers
– BRB 31,500 32,000
– HRB 31,501-150,000 32,001-150,000
Personal Savings Allowance (PSA)
– Basic rate taxpayer 1,000 1,000
– Higher rate taxpayer 500 500
Dividend Nil Rate Band (DNRB) 5,000 5,000

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

Tax Rates 2017/18 and 2016/17
Rates differ for General, Savings and Dividend income G S D
Basic rate 20% 20% 7.5%
Higher rate 40% 40% 32.5%
Additional rate 45% 45% 38.1%

General income (salary, pensions, business profits, rent) usually 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 will tax interest at nil, where it would otherwise be taxable at 20% or 40%.

Dividends are normally taxed as the ‘top slice’ of income. The DNRB taxes the first £5,000 of dividend income at nil, rather than the rate that would otherwise apply.

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 2017/18 2016/17
For non-UK domiciled individuals who have been
UK resident in at least
   
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 N/A 90,000




Pensions

Registered Pensions

  2017/18 2016/17
Lifetime allowance (LA) £1m £1m
Annual allowance (AA)* 40,000 40,000

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

*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. The AA can be reduced to £4,000, where certain pension drawings have been made.

State pension (per week)

  2017/18 2016/17
Old state pension – Single person £122.30 £119.30
Old state pension – Married couple 195.60 190.80
New state pension† 159.55 155.65

†applies to those reaching state retirement age after 5 April 2016.




Annual Investment limits

  2017/18 2016/17
Individual Savings Account (ISA)
– Overall limit £20,000 £15,240
– Lifetime ISA 4,000 N/A
Junior ISA 4,128 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 £157pw £157pw
Main rate* charged up to £866pw no limit
2% rate on earnings above £866pw 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 £866pw.

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 £2.85
Small profits threshold £6,025

Class 3 (Voluntary)

Flat rate per week £14.25

Class 4 (Self-employed)

On profits £8,164 – £45,000 9.0%
On profits over £45,000 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 9% 12%
51-75 13% 16%
76-94 17% 20%
Above 94 Add 1% for every 5g/km
Above 189 (petrol)/ 174 (diesel) 37% maximum

Vans

Chargeable value of £3,230 (2016/17 £3,170) 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 £22,600 (2016/17 £22,200).

Van:£610 (2016/17 £598).

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

  2017/18 2016/17
Annual exemption
Individuals, estates £11,300 £11,100
Most trusts 5,650 5,550
Tax rate
Individual (to basic rate limit)* 10% 10%
Individual (above basic rate limit)* 20% 20%
Entrepreneurs' Relief (ER)** 10% 10%
Trusts, estates* 20% 20%

*Individuals are taxed at 18%/28% on gains on residential property and receipts 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 and shares in a trading company (from a minimum 5% holding) by an officer/employee. Various conditions apply.

Shares in an unquoted trading company may be eligible for a 10% CGT rate on lifetime gains up to £10m, if disposed of after 5 April 2019 by someone who is neither a paid officer nor employee of the company (Investors’ Relief).




Corporation Tax

Year to 31.3.2018 31.3.2017
Corporation Tax rate 19% 20%

Research and development relief From 1.4.2017 From 1.4.2016
SME enhanced expenditure
deduction scheme*

130%

130%
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.




Main Capital Allowances

Plant and machinery Limit
100% Annual Investment Allowance (AIA) £200,000

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. The tax applies to properties valued at more than £500,000.

Property value Annual charge to
  31.3.2018 31.3.2017
£0.5m - £1m £3,500 £3,500
£1m - £2m 7,050 7,000
£2m – £5m 23,550 23,350
£5m – £10m 54,950 54,450
£10m – £20m 110,100 109,050
£20m + 220,350 218,200

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

Residential property (1st property only)
SDLT*
£,000's
Rate on band
%
LBTT
£,000's
Rate on band
%
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).

Non residential or mixed use property
SDLT
£,000's
Rate on band
%
LBTT
£,000's
Rate on band
%
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 1.4.2017 £85,000 per annum
Deregistration level from 1.4.2017 83,000 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.

Cash accounting and Annual accounting schemes

Annual taxable turnover to enter scheme Up to £1.35m
Must leave scheme if annual taxable turnover Exceeds £1.60m

Option to tax property

Notify HMRC within 30 days.




Inheritance Tax

2017/18 2016/17
Nil rate band (NRB)* £325,000 £325,000
NRB Residential enhancement (RNRB)†* 100,000 N/A
Rate of tax above nil rate band** 40% 40%
Lifetime transfers to most trusts 20% 20%

†RNRB is available for transfers of a main residence to direct descendents. It tapers away at the rate of £1 for every £2 of estate value above £2m.

*Up to 100% of the proportion of a deceased spouse’s/civil partner’s unused NRB and RNRB band may be claimed to increment the current NRB and RNRB when the survivor dies.

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

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 2017/18 2016/17
1st payment on account 31 January 2018 2017
2nd payment on account 31 July 2018 2017
Balancing payment 31 January 2019 2018
Capital Gains Tax* 31 January 2019 2018
Other payment dates
Class 1A NIC 19 July 2018 2017
Class 1B NIC 19 October 2018 2017

*Non-residents with gains on UK residential property must pay CGT within 30 days of disposal unless already filing a self assessment tax return.

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

2016/17 Filing deadlines
Issue P60s to employees 31 May 2017
P11D, P11D(b) 6 July 2017
Self assessment tax return (SATR) paper version 31 October 2017
Online SATR if outstanding tax
to be included in 2018/19 PAYE code

30 December 2017
Online SATR 31 January 2018




Useful Rates

National Minimum Wage
Rates per hour

From 1.04.17

From 1.10.16
Aged 25 and over (National Living Wage) £7.50 £7.20
Aged 21 - 24 7.05 6.95
Aged 18 - 20 5.60 5.55
Aged 16 - 17 4.05 4.00
Apprentices 3.50 3.40

Child Benefit (per week) 2017/18 2016/17
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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