Tax and NIC rates

Income tax allowance

Allowances £ 2015/16 2016/17 2017/18
Personal Allowances*      
those born after 5 April 1948 10,600 11,000 11,500
those born between 6 April 1938 and 5 April 1948 10,600 11,000 11,500
those born before 6 April 1938 10,660 11,000 11,500
Transferable tax allowance:      
for married couples and civil partners 1,060 1,100 1,150
Married couple's allowance:      
for those born before 6 April 1935, maximum amount 8,355 8,355 8,845
for those born before 6 April 1935, minimum amount 3,220 3,220 3,260
Blind person's allowance 2,290 2,290 2,320
Income limit for personal allowance 100,000 100,000 100,000
Income limit for personal allowance for those born before 6 April 1938 (2015/16 only) and for married couple’s allowance** 27,700 27,700 28,000
Dividend Allowance*** n/a 5,000 5,000
Personal Savings Allowance****      
Basic Rate Taxpayers n/a 1,000 1,000
Higher Rate Taxpayers n/a 500 500



* In 2015/16 an individual’s personal allowance depends on their date of birth and their income in the tax year. From 2016/17 onwards, all individuals are entitled to the same personal allowance, regardless of their date of birth; this is subject to the income limit of £100,000.

** The age-related personal allowance is reduced where the taxpayer's income in the tax year is above the income limit, by £1 for every £2 above the limit until the level of the basic personal allowance is reached. For 2015/16 a taxpayer born before 6 April 1938, who has taxable income between £27,820 and £100,000, is entitled to the basic personal allowance of £10,600. From 2016/17 onwards, all individuals are entitled to the same personal allowance, regardless of their date of birth. This is subject to the £100,000 income limit.

*** From 2016/17, any individual who receives dividend income is entitled to a Dividend Allowance of £5,000. This is a nil rate band of tax, which means an individual pays no income tax on their first £5,000 of dividend income. It does not reduce the amount of taxable income.

**** From 2016/17, basic rate and higher rate taxpayers (but not additional rate taxpayers) who receive savings income are entitled to a Personal Savings Allowance. This is a nil rate band of tax, which means that basic rate and higher rate taxpayers pay no income tax on £1,000 or £500 of savings income respectively. The Personal Savings Allowance does not reduce the amount of taxable income.

Income tax – taxable bands*

2015/16 Band 2016/17 Band 2017/18 Band
Starting rate for savings
0%
Up to £5,000 Starting rate for savings
0%
Up to £5,000 Starting rate for savings
0%
Up to £5,000
Basic rate
20%
Up to £31,785 Basic rate
20%
Up to
£32,000

Basic rate
20%

Up to £33,500
Higher rate
40%
£31,786 to £150,000 Higher rate
40%
£32,001 to £150,000 Higher rate
40%
£33,501 to £150,000
Additional rate
45%
Over £150,000 Additional rate
45%
Over £150,000 Additional rate
45%
Over £150,000

 

* From April 2016, if you live in Scotland and are a Scottish taxpayer, Scottish rates and bands apply to your non-savings, non-dividend income. See our section on Scottish income tax for more information, including the rates and bands.

Dividends*

2015/16 Tax rate 2016/17 Tax rate 2017/18 Tax rate
Up to £31,785 10% Up to
£32,000
7.5% Up to £33,500 7.5%
£31,786 – £150,000 32.5% £32,001 – £150,000 32.5% £33,501 – £150,000 32.5%
Over £150,000 37.5% Over £150,000 38.1% Over £150,000 38.1%

 

* From April 2016 the dividend tax credit (10%) is abolished and replaced with a £5,000 tax-free Dividend Allowance. In addition, the dividend tax rates have changed.

National Insurance contributions (NIC)

Class 1 primary NIC (employee – EE)

£ per week (unless stated) 2015/16 2016/17 2017/18
Lower earnings limit 112 112 113
Primary theshold 155 155 157
Upper accrual point 770 n/a n/a
Upper earnings limit 815 827 866
EE primary Class 1 rate between primary threshold and upper earnings limit 12% 12% 12%
EE primary Class 1 rate above upper earnings limit 2% 2% 2%
EE contracted-out rebate – salary 1.4% n/a n/a
Married women's reduced rate between primary threshold and upper earnings limit 5.85% 5.85% 5.85%
Married women's rate above upper earnings limit 2% 2% 2%



Class 1 secondary NIC (employers – ER)

£ per week (unless stated) 2015/16 2016/17 2017/18
Secondary threshold 156 156 157
ER secondary Class 1 rate above secondary threshold 13.8% 13.8% 13.8%
ER contracted-our rebate – salary related schemes 3.4% n/a n/a



Class 2 NIC (self-employed)

£ per week (unless stated) 2015/16 2016/17 2017/18
Class 2 rate 2.80 2.80 2.85
Class 2 small earnings exception/small profits (per year) 5,965 5,965 6,025
Special Class 2 rate for share fishermen 3.45 3.45 3.50
Special Class 2 rate for volunteer development workers 5.60 5.60 5.65



Class 3 NIC (voluntary)

£ per week 2015/16 2016/17 2017/18
Class 3 rate 14.10 14.10 14.25



Class 4 NIC (self-employed)

£ per year 2015/16 2016/17 2017/18
Class 4 lower profits limit 8,060 8,060 8,164
Class 4 upper profits limit 42,385 43,000 45,000
Class 4 rate between lower profits limit and upper profits limit 9% 9% 9%
Class 4 rate above upper profits limit 2% 2% 2%


Capital gains tax

  2015/16 2016/17 2017/18
Standard rate 18% 10%/18%* 10%/18%
Rate for higher and additional taxpayers 285 20%/28%* 20%/28%
Annual exemption £11,100 £11,100 £11,300
Entrepreneurs' Relief rate 10% 10% 10%
Entrepreneurs' Relief lifetime limit 10M £10m £10m

 

* CGT rates of 10% and 20% introduced in Finance Bill 2016 for disposals on or after 6 April 2016 do not apply to transactions involving residential property or carried interest.  CGT rates for these transactions remain at 18% and 28%.

Inheritance tax

Chargeable lifetime transfers (after exemptions) 2015/16 2016/17 2017/18
Nil rate band – 0% Up to £325,000 Up to £325,000 Up to £325,000
20% Over £325,000 Over £325,000 Over £325,000
On death (net estate)      
Nil band rate – 0% Up to £325,000 Up to £325,000 Up to £325,000
Residence nil rate band* – 0% n/a n/a Up to £100,000
40% Over £325,000 Over £325,000 Over £325,000 or £425,000


* From April 2017, there is a residence nil rate band of £100,000. This will be available on the death of an individual, if they pass on a property, which has been their residence at some point, to a direct descendant.

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