2017 rates and allowances

Published: 07 Mar 2018

 

Written by Ray Coman

 

Basic State Pension

 

  2016-17

 

2015-16

 

 

Weekly        

Annual                Weekly        Annual             
Single tier pension £155.60 £8,091.20 N/a N/a
Basic single person £119.30 £6,203.60 £115.95 £6,029.40
Spouse's/civil partner's         £71.50 £3,718 £69.50 £3,614

 

Pension credit - standard minimum guarantee

 

       
Single £155.60 £8,091.20 £151.20 £7,862.40
Couple £237.55 £12,352.60 £230.85 £12,004.20

 

 Corporation Tax

 

 

Financial year to

 

31 March 2017 31 March 2016
First £300,000                                                    20%                         20%
Next £1,200,000 20% 20%
On profits over £1,500,000 20% 20%
Tax credit on dividends 10% 10%
Marginal relief fraction n/a n/a

 

Between 1 April 2014 and 31 March 2015, the effective rate of corporation tax on total profits increased from 20% to 21.25% on a sliding scale where profits were between £300,000 and £1,500,000. While this created a hybrid rate of between 20% and 21.25%, the marginal rate was higher than 21.25%. For instance, tax payable on profits of £500,000 would be 21%. However, for every extra pound earned above £300,000, 21.25 pence in tax would be payable.

To calculate corporation tax between the small profits rate and main rate, firstly take the amount of tax at the main rate on profits, calculate the difference between the upper limit for marginal relief and profits, and apply the marginal relief fraction to this difference. The result of this step is deducted from tax at the main rate on profits to arrive at corporation tax payable.

An alternative method of calculation is to apply the small profits rate to the first £300,000 and the marginal rate on the surplus.

Since dividends have suffered corporation tax at source, they are assessed to income tax with a tax credit. To the extent that the dividends are within the basic rate band there is no further tax to pay. To the extent dividend increase total income into higher rate of tax there is an effective 25% payable on the gross amount. The tax credit is not repayable. Therefore, if dividends received are less than the personal allowance, the amount of tax credit would not be repaid.

 Capital Gains Tax

  2016-17 2015-16
Standard rate 10% 18%
Higher rate 20% 28%
Entrepreneurs' relief - effective rate 10% 10%
Entrepreneurs' relief £10 mil. £10 mil.

 

Annual exemption

 

   

Individual

£11,100 £11,100
settlement(s) (spread over total number) £5,550  £5,550

 

Chattels exemption

 

   
(proceeds per item or set)  £6,000  £6,000
Marginal relief  5/3 Excess over £6,000  5/3 Excess over £6,000

 

Individual Savings Account 

Individual savings accounts (ISAs)          2016-17 2015-16
Overall investment limit £15,240 £15,240
Junior ISA  £4,080 £4,080

 

 VAT

 

 

 

From 1 April 2016 From 1 April 2015
Standard rate 20% 20%
Reduced rate 5% 5%
Zero rate 0% 0%

 

Taxable turnover limits

 

   
Registration - last 12 months or next 30 days over                                            £82,000
Deregistration - next 12 months under   £80,000
Cash accounting scheme-up to £1,350,000 £1,350,000
Flat rate scheme turnover limit £150,000 £150,000
Annual accounting scheme up to £1,350,000 £1,350,000

 

Stamp Duties

Residential property Since 4 December 2014
Up to £125,000 Zero
Over £125,000 to £250,000 2%
Over £250,000 to £925,000 5%
Over £925,000 to £1.5 million 10%
Over £1.5 million 12%
Over £500,000 (companies) 15%

 

Mileage Allowance

Flat Rate First 10,000 miles Miles over 10,000
Car or van 45p 25p
Motorcycle 24p 24p
Bicycle 20p 20p
Passenger 0.05p 0.05p

 

Enterprise Investment Scheme and Venture Capital Trusts

Income tax relief limits effective 2014/15 are as follows:

 

  EIS SEED VCT
  £ £ £
Annual Investment limits £1,000,000 100,000 £200,000
Income tax relief rates 30% 50% 30%
Are dividends taxable? Yes Yes No
Capital gains tax exempt Yes Yes Yes
Minimum holding period to prevent capital gains tax clawback 3 years 3 years N/a
Minimum holding period to prevent income tax clawback 3 years
3 years 5 years
Income tax relief for capital losses Yes Yes No
Business property relief for inheritance tax purposes Yes Yes No

 

Research and Development Tax Relief

 

  From 1 April 2015  Before 1 April 2015
Small & medium sized companies 230% 225%
Large companies 130% 130%

 

EU definition of small and medium sized companies for R&D tax relief purposes

 

  Since 1 August 2008 Before 1 August 2008
Employees <500 <250
Turnover ≤€100 million ≤€50 million
Balance sheet assets ≤€86 million ≤€43 million


Advisory Fuel Rates

From 1 March 2016

  Rates per mile
  £ £ £
Engine capacity Petrol Gas Diesel
Less than 1,400 cc 0.10 0.07 0.00
1401 to“ 2,000 cc 0.12 0.08 0.00
More than 2,000 cc 0.19 0.13 0.00
1600cc or less 0.00 0.00 0.08
1601cc to 2,000 cc 0.00 0.00 0.10
Over“ 2,000 cc 0.00 0.00 0.11

 

National Insurance Contributions 

Thresholds for Class 1 National Insurance Contributions (NICs)

 

  2016-17 2015-16
Thresholds Annual Monthly Weekly Annual Monthly Weekly
Lower earnings limit  £5,824 £485 £112  £5,824 £485 £112
Primary earnings threshold  £8,060 £671  £155  £8,060 £671 £155
Secondary earnings threshold £8,112  £676  £156  £8,112 £676 £156
Upper accruals point N/a N/a N/a £40,040 £3,337 £770
Upper earnings limit £43,000 £3,583 £827 £42,380 £3,531 £815

 

Class 1 NIC rate on earnings

 

  2016-17 2015-16
  Employee Employer Employee Employer
Between primary threshold and upper earnings limit 12% 13.8% 12% 13.8%
Above upper earnings limit 2% 13.8% 2% 13.8%
Contracted out rebate N/a N/a 1.4% 3.4%

 

Prior to 2016/17 it was possible for an employee to contract out of the additional state pension, and pay into an approved private pension instead.  However, contracting out is no longer possible from 2016/17, since the additional state pension has been discontinued.

 

Class 1(A) NICs

  2016-17 2015-16
Rate 13.8% 13.8%

 

National insurance is payable by employers on most taxable benefits. There is no lower limit. Taxable benefits are not generally subject to employee's national insurance contributions, although certain readily convertible assets, such as listed shares, are subject to employee's national insurance contributions.

 

National insurance on Self-employment

 

Class 2 NICs

  2016-17 2015-16
  Weekly Yearly Weekly Yearly
Flat rate £2.80 £145.60 £2.80 £145.60
Small earnings exception limit   £5,965   £5,965

Class 2 national insurance is payable by sole traders and partners in a partnership. If profits are below the small profits limit then it is possible to be excepted from liability to Class 2 NICs. The accrual of social security will be affected if no class 2 liability is paid for a particular year.

 

 Class 4 NICs

  2015-17 2015-16
  Profit band Rate Profit band Rate
Between lower profits and upper profits limit £8,060 to £43,000 9% £8,060 to £42,385 9%
Above upper profits limit   2%   2%

 

Self-employed individuals are liable to class 4 national insurance contributions in addition to class 2 NICs and income tax. Class 4 national insurance contributions will not count towards state benefits, until Class 2 NICs are abolished.

 

Class 3 NICs

  2016-17 2015-16
  Weekly Yearly Weekly Yearly
Flat rate £14.10 £733.20 £14.10 £733.20

 

A person can top up national insurance by making voluntary contributions.  This would be suitable for a non-resident who does not have sufficient qualifying years towards a state pension.

 

Income Tax

 

 

Rate

2016-17

2015-16

Starting rate: 0%

£0 to £5,000

£0 to £5,000

Basic rate: 20%

£0 to £32,000

£0 to £31,786

Higher rate: 40%

£32,000 to £150,000

£31,786 to £150,000

Top rate: 45%

Over £150,000

Over £150,000

 

Rates of income tax on dividends

Rate

2016-17

2015-16

Dividend Allowance £5,000 N/a 
Basic rate: 7.5% £0 to £32,000  

Basic rate: 0%

 

£0 to £31,785

Higher rate: 32.5% £32,000 to £150,000  

Higher rate: 25%

 

£31,785 to £150,000

Top rate: 38.1% Over £150,000
 

Top rate: 30.5%

 

Over £150,000

 

Personal allowances

Income Tax allowances

2016-17

2015-16

Personal Allowance (basic)

£11,000

£10,600

Income limit for Personal Allowance

£100,000

£100,000

Personal Allowance for people born between 6 April 1938 and 5 April 1948

£N/a

£10,600

Personal Allowance for people before 6 April 1938

£N/a

£10,660

Married couple’s allowance income limit

£27,700

£27,700

Married Couple's Allowance (born before 6th April 1935)

£8,355

£8,355

Minimum amount of Married Couple's Allowance

£3,220

£3,220

Blind Person's Allowance

£2,290

£2,290

Marriage allowance £1,100

£1,060

From 2016/17, there are no longer any age -related allowances.

 

Inheritance Tax

Transfers on death, or made within seven years of death 2016-17 2015-16
Nil rate band £325,000 £325,000
Rate of tax on excess 40% 40%
Chargeable lifetime transfers 20% 20%
Relief for businesses, unlisted, AIM companies and agricultural property 100% 100%
Relief for certain other business assets 50% 50%

 

Taper relief

There is no inheritance tax on a gift which is made more than seven years after a person's death. Where a person dies between three and seven years after making a gift, the full rate of tax is reduce at a rate of 20% per year, as the following table illustrates:

Time since death Effective rate of inheritance tax
Between three and four years 32%
Between four and five years 24%
Between five and six years 16%
Between six and seven years 8%

 

Quick succession relief


Where a person dies within five years of receiving property (whether by a lifetime or death gift) on which inheritance tax has already been paid, the tax due on the estate is reduced by quick succession relief. The inheritance tax liability is calculated as: Tax paid on first transfer × value after tax/value before tax × percentage in the table below

 

Time since death Percentage inheritance tax relief
Less than a year 100%
Between one and two years 80%
Between two and three years 60%
Between three and four years 40%
Between four and five years 20%

 

 

Pension Rates

 

 

2016-17 2015-16

Lifetime Allowance

£1,000,000 £1,250,000

Annual Allowance

£40,000 £40,000

Lifetime Allowance Charge

55% on excess paid as a lump sum.   25% on excess not taken as a lump sum. 55% on excess paid as a lump sum.   25% on excess not taken as a lump sum.

Annual Allowance Charge

20%-45%, depending on other income 20%-45%, depending on other income

Maximum pension contribution with tax relief

100% of relevant UK earnings or £3,600, (subject to the annual allowance) 100% of relevant UK earnings or £3,600, (subject to the annual allowance)

 

 

Car Benefit Charge 

Co2 Emissions g/km Petrol Engine % Diesel Engines %
50 or less 7 10
51-75 11 14
76-94 15 18
95-99 16 19
100-104 17 20
105-109 18 21
110-114 19 22
115-119 20 23
120-124 21 24
125-129 22 25
130-134 23 26
135-139 24 27
140-144 25 28
145-149 26 29
150-154 27 30
155-159 28 31
160-164 29 32
165-169

30

33
170-174 31 34
175-179 32 35
180-184 33 36
185-189 34 37
190-194 35 37
195-199 36 37
200 g/kg and above 37 37

 

Van benefit charge

  2016-17 2015-16
Van benefit charge £3,170 £3,150

 

 

Fuel Benefit charge

 

  2016-17 2015-16
Car Fuel Benefit Charge Multiplier £22,200 £22,100
Van Fuel Benefit Charge Multiplier £598 £584

 

Capital Allowances

 

Rate of the annual investment allowance

 

 

 

From 1st January 2016 01/04/2014 to 31/12/2015
Annual investment allowance 100% 100%
Main rate on general pool 18% 18%
Special rate pool 8% 8%
Know-how and patents 25% 25%

  

Annual investment allowance limit

 

 

 

From 1st January 2016 01/04/2014 to 31/12/2015
Annual investment allowance £200,000 £500,000

 

Capital allowances for cars

 

 

2016-17 2015/16
CO2 emissions below 75 g/km 100% 100%
CO2 emissions between 75 g/km and 130 g/km 18% 18%
CO2 emissions over 130 g/km 8% 8%

 The main pool rate applies to a car with CO2 emissions below 130 g/km, and the special rate applies to car with a higher CO2 emissions. Up to 31 March 2018, car with low emissions, such as those which are electrically propelled, will qualify for 100% capital allowance.

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