2017 rates and allowances
Written by Ray Coman
Basic State Pension
2016-17 |
2015-16
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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
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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
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Individual |
£11,100 | £11,100 |
settlement(s) (spread over total number) | £5,550 | £5,550 |
Chattels exemption
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(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
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From 1 April 2016 | From 1 April 2015 |
Standard rate | 20% | 20% |
Reduced rate | 5% | 5% |
Zero rate | 0% | 0% |
Taxable turnover limits
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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% |
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£0 to £31,785 |
Higher rate: 32.5% | £32,000 to £150,000 | |
Higher rate: 25% |
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£31,785 to £150,000 |
Top rate: 38.1% | Over £150,000 |
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Top rate: 30.5% |
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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
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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.