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TAXABLE INCOME BANDS AND TAX RATES

  2016/17 2015/16
Starting rate limit for savings £5,000* £5,000*
Starting rate for savings 0% 0%
Basic rate band £32,000 £31,785
Basic rate 20% 20%
Dividend ordinary rate 7.5% 10%**
Higher rate band £32,001 – £150,000 £31,786 – £150,000
Higher rate 40% 40%
Dividend upper rate 32.5% 32.5%**
Additional rate band Over £150,000 Over £150,000
Additional rate 45% 45%
Dividend additional rate 38.1% 37.5%**

*The starting rate does not apply if taxable non-saving income exceeds the starting rate limit.

** Effective dividend tax rates for 2015/16 are 0%, 25% and 30.6%.

  • Allowances that reduce taxable income
2016/17 2015/16
Personal allowance £11,000 £10,600
Personal allowance born before 6 April 1938 £11,000 £10,660*
Personal savings allowance:

Basic rate taxpayer

Higher rate taxpayer

 £1,000

£500

  

n/a

n/a
Dividend allowance £5,000 n/a
Married couples/civil partners transferable allowance £1,100 £1,060
Rent a room £7,500 £4,250
Blind person’s allowance £2,290 £2,290

The personal allowance is reduced by £1 for each £2 of income from £100,000 to £122,000 (2015/16 £121,200).

*For 2015/16 the higher personal allowance is reduced by £1 for each £2 of income above £27,700 until £10,600 is reached.

  • Allowances that reduce tax
2016/17 2015/16
Married couple’s allowance (MCA) tax reduction £835.50 £835.50

Available to people born before 6 April 1935. The age for MCA is that of the elder spouse or civil partner. The loss of tax reduction is 10p for each £2 of income above £27,700 (2015/16, £27,700) until £322 (2015/16, £322) is reached.

  • High income child benefit charge
2016/17 2015/16
Threshold £50,000 £50,000

There is a tax charge of 1% of the child benefit received for each £100 that the threshold is exceeded up to a maximum of 100%.

INHERITANCE TAX

2016/17 2015/16
Single person’s threshold £325,000 £325,000
Combined threshold limit for married couples and civil partners £650,000 £650,000
  • Tax rates
2016/17 2015/16
Main rate 40% 40%
Chargeable on lifetime transfers 20% 20%
Transfers on or within 7 years of death* 40% 40%
Reduced rate** 36% 36%

*All lifetime transfers not covered by exemptions and made within 7 years of death will be added back into the estate for the purposes of calculating the tax payable. This may then be reduced as follows:

Years before death 0-3 3-4 4-5 5-6 6-7
Tax reduced by 0% 20% 40% 60% 80%

** Applies if 10% or more of net estate given to charity.

Contact us about exemptions.

CAPITAL GAINS TAX

2016/17 2015/16
Main rates
     Individual basic rate band 10% 18%
                       higher rate band 20% 28%
Gains on residential property not eligible for PPR and carried interest
     Individual basic rate band 18% 18%
                       higher rate band 28% 28%
Trusts
Main rate 20% 28%
   Residential property 28% 28%
Annual exemption Individuals £11,100 £11,100
Trusts £5,550 £5,550
Entrepreneurs’ relief Applicable rate 10% 10%
Lifetime limit £10m £10m

NATIONAL INSURANCE

  • Class 1 (not contracted out)
Employee Employer
Earnings per week
Up to £155                               nil* Up to £156                             0%
From £155.01 to £827           12% Over £156                         13.8%**
Over £827                                 2%
Over state pension age           0% Over state pension age   13.8%

*Entitlement to contribution based benefits are retained for earnings between £112 and £155 per week.

**0% for employees under 21 and apprentices under 25 on earnings up to £827 per week.

  • Class 1A
On relevant benefits 13.8%
  • Class 2
Self-employed £2.80 per week
Small profits threshold £5,965 per annum
  • Class 3
Voluntary £14.10 per week
  • Class 4*
Self-employed on profits £8,060-£43,000 9%
Over £43,000 2%

* Exemption applies if the state retirement age is reached by 6 April 2016.

  • Employment allowance
Per employer, per year (excluding one person companies) £3,000*

*1 claim only for companies in a group or under common control.

PENSION CONTRIBUTIONS

Individuals £3,600 or 100% of net relevant earnings to £40,000*
Employers £40,000* less employee contributions
Minimum age for accessing benefits 55
On cumulative benefits exceeding £1,000,000

* Plus unutilised allowances from the 3 previous years. Limit may be reduced to £10,000 once money purchase pensions are accessed.

CORPORATION TAX

Financial year to 31 March 2017 2016
Taxable profits Main rate 20% 20%

MAIN CAPITAL ALLOWANCES

  • Initial allowances
First year allowance:

for certain environmentally beneficial equipment, electric and low CO2 emission (up to 75g/km) cars – must be new and unused

 100%
Annual investment allowance:

on first £200,000 (excludes cars)

 100%
  • Writing down allowances
Other plant and machinery 18%
Long-life assets, integral features of buildings, thermal insulation 8%
Cars 76g/km – 130g/km 18%
Over 130g/km 8%

INVESTMENT RELIEFS

Enterprise investment scheme Limit £1,000,000
Relief rate 30%
Venture capital trust Limit £200,000
Relief rate 30%
Seed enterprise investment scheme Limit £100,000
Relief rate 50%

TAX-FREE MILEAGE ALLOWANCES

Cars and vans First 10,000 business miles 45p
Thereafter 25p
Motorcycles 24p
Bicycles 20p
Business passenger 5p

For national insurance purposes: 45p for all business miles for cars and vans.

  • Fuel only allowance for company cars
From 1 March 2016 Petrol Diesel LPG
Up to 1400cc* 10p 8p 7p
1401**-2000cc 12p 10p 8p
Over 2000cc 19p 11p 13p

These rates are issued quarterly during the tax year.

*1600cc for diesel.

**1601cc for diesel.

Hybrid cars are treated as either petrol or diesel cars.

VEHICLE AND FUEL BENEFITS IN KIND (BIK)

The taxable BIK is calculated as a percentage of the car’s UK list price. The percentage depends on the car’s CO2 emissions in grams per kilometre (g/km).

Emissions Petrol               Diesel
0 – 50g/km 7% 10%
51 – 75g/km 11% 14%
76 – 94g/km 15% 18%
Over 94g/km add 1% for every 5g/km
200g/km* and over 37% maximum

*Over 184g/km for diesel.

The list price is on the day before first registration, including most accessories and is reduced by any employee’s capital contribution (max £5,000) when the car is first made available.

Where the cost of all fuel for private use is borne by the employee, the fuel benefit is nil. Otherwise, the fuel benefit is calculated by applying the car benefit percentage (above) to £22,200 (2015/16, £22,100).

Vans where private use is more than home to work travel; £3,170 (2015/16, £3,150) benefit and £598 (2015/16, £594) for private fuel. Payments by employees for private use may reduce these BIK. Vans with zero emissions have a benefit of £634 (2015/16, £630).

VALUE ADDED TAX

From 1 April 2016 2015
Standard rate 20% 20%
VAT fraction 1/6 1/6
Reduced rate 5% 5%
VAT fraction 1/21 1/21
  • Taxable turnover limits
From 1 April 2016 2015
Registration (last 12 months or next 30 days over) £83,000 £82,000
Deregistration (next year under) £81,000 £80,000
Annual accounting scheme £1,350,000 £1,350,000
Cash accounting scheme £1,350,000 £1,350,000
Flat rate scheme £150,000 £150,000

STAMP TAXES

Stamp duty is payable at a rate of 0.5% on certain transfers of shares and securities of £1,000 and over.

The incremental rate of stamp duty land tax is only payable on the part of the property price within each land duty. For certain additional residential properties the rates are 3% higher.

  • Stamp duty land tax
On the transfer of residential* property                  On the transfer of non-residential property
Less than £125,000 0% Less than £150,000 0%
From £125,001 to £250,000 2% From £150,001 to £250,000 2%
From £250,001 to £925,000 5% Over £250,000 5%
From £925,001 to £1,500,000 10%
Over £1,500,000 12%
Over £500,000 15%**

*Including all corporate residential property, subject to certain exclusions.

**For purchases by certain non-natural persons.

  • Land and buildings transaction tax in Scotland
On the transfer of residential property                   On the transfer of non-residential property
£0 – £145,000 0% £0 – £150,000 0%
£145,001- £250,000 2% £150,001- £350,000 3%
£250,001 – £325,000 5% Over £350,000 4.5%
£325,001 – £750,000 10%
Over £750,000 12%

ISA AND JUNIOR ISA

Annual investment limit 2016/17 2015/16
ISA £15,240 £15,240
Junior ISA £4,080 £4,080

IMPORTANT NOTICE

These rates and allowances are based on Budget 2016 and are for information only. They are subject to confirmation by the Finance Act 2016.

Contact us to discuss your planning.