Useful information

Income Tax

Bands

Income tax bands 2017-18 2016-17
Savings standard rate – 0%* £0 – £5,000 £0 – £5,000
Basic rate – 20% £0 – £33,500 £0 – £32,000
Higher rate – 40% £33,501 – £150,000 £32,001 – £150,000
Additional rate – 45% Over £150,000 Over £150,000
Dividend allowance £5,000 £5,000
Dividend prdinary rate 7.5% 7.5%
Dividend upper rate 32.5% 32.5%
Dividend additional rate – 45% 38.1% 38.1%

* Savings income is taxed at 0% up to £5,000. If an individual’s taxable nonsavings income exceeds £5,000, then the starting limit for savings will not be available.

Reliefs

Allowances 2017-18 2016-17
Personal allowance £11,500 £11,000
Registered blind person’s allowance £2,320 £2,290
Income limit for PA £100,000 £100,000
Income limit for age related allowances £28,000 £27,700
Married couples allowance
– Born before 6 April 1935 £8,445 £8,355
– Minimum amount £3,260 £3,220
Marriage allowance £1,150 £1,100

Pensions

Contributions 2017-18 2016-17
Lifetime allowance £1,000,000 £1,000,000
Maximum annual contribution £40,000 £40,000
Tax on excess Marginal rate Marginal rate
Normal minimum pension age 55 55
Basic state pension – per week 2017-18 2016-17
Single person £122.30 £119.30

Capital Gains Tax

Annual exempt amount 2017-18 2016-17
Individuals £11,300 £11,100
Trusts £5,650 £5,550
Rates
Standard rate taxpayers 10% 10%
Higher rate taxpayers/Trustees 20% 20%
Entrepreneurs’ relief lifetime limit £10,000,000 £10,000,000
Entrepreneurs’ relief rate 10% 10%

Tax returns are issued annually following the end of the tax year on the 5th April. Tax returns have to be submitted by the 31st October in paper form or by the following 31st January using the online submission facility.

Self assessment tax payers are usually required to pay their income tax liabilities in three installments each year. These are due on:

Business Tax

Corporation tax is calculated at the applicable rate for the financial year (2017/18 – 19%). A financial year starts on the 1st April and ends on the 31st March. If a company’s accounting period does not coincide with the financial year, its profits must be apportioned between the two financial years.

All corporation tax and related payments must be made electronically. All companies that are not large have a fixed date for payment of corporation tax which is 9 months and 1 day after the end of the relevant accounting period.

Employment taxes

Employees – Class 1 NICs

Weekly earnings limit Contracted In Contracted Out
Up to £113 (LEL1) 0% 0%
£113.01 – £157 (PT2) 0% 1.4% rebate
£157.01 – £866 (UEL3) 12%
Over £866 2% 2%

Employers – Class 1 NICs

Weekly earnings limit Contracted In Contracted Out
Up to £113 0% 0%
£113.01 – £157 (ST1) 0% 3.4% rebate
£157.01 – £8660 13.8% 10.4%
Over £866 13.8% 13.8%

£3,000 employment allowance

An annual allowance of £3,000 for all businesses and charities to be offset against their employers Class 1 NICs was introduced effective from April 2016. The allowance can be claimed as part of the normal payroll process through RTI.

VAT

There are three ratesof VAT in the UK:

The standard rate applies to all taxable supplies which are not subject to the reduced or the zero rates.

Businesses have to register for VAT if any of the following apply:

There is the option to voluntarily register for VAT on a voluntary basis if the turnover is below the registration threshold.

The taxable turnover threshold which determines whether a person or business may apply for deregistration is currently £83,000