Tax Rate Centre March 2015

Contents

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Introduction

Our Tax Rates Centre provides a summary of some of the essential tax rates, dates and figures for 2015/16.

2015/16 Tax Rates Centre is for guidance only and professional advice should be obtained before acting on any information contained as no responsibility can be accepted for loss occasioned as a result of action taken or refrained from in consequence of its contents.

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Income Tax

Our Tax Rates Centre provides a summary of some of the essential tax rates, dates and figures for 2015/16.

Income tax rates Note 2015/16 2014/15
Basic rate band – income up to £31,785 £31,865
  Starting rate for savings income *0% *10%
  Basic rate 20% 20%
  Dividend ordinary rate 10% 10%
Higher rate – income over £31,785 £31,865
  Higher rate 40% 40%
  Dividend upper rate 32.5% 32.5%
Additional rate – income over £150,000 £150,000
  Additional rate 45% 45%
  Dividend additional rate 37.5% 37.5%
Starting rate limit (savings income) *£5,000 *£2,880
* If an individual’s taxable non-savings income exceeds the starting rate limit, then the starting rate will not be available for savings income
Trusts
For interest in possession trusts on all income, and other trusts on the first £1,000 of income (“standard rate band”):
dividend ordinary rate 4 10% 10%
savings income 4 20% 20%
other income 4 20% 20%
Income of other trusts above £1,000 is taxed at the special trust rates:
rate applicable to trusts 45% 45%
dividend trust rate 37.5% 37.5%
Personal allowance (PA)
Born after 5 April 1948 3 £10,600 £10,000
Born between 6 April 1938 and 5 April 1948 1,3 £10,600 £10,500
Born before 6 April 1938 1,3 £10,660 £10,660
Blind person’s allowance £2,290 £2,230
Married couple’s allowance (MCA)
Either partner born before 6 April 1935 (relief restricted to 10%) 2,3 £8,355 £8,165
Transferable tax allowance
For certain married couples and civil partners born after 5 April 1935 (relief 20%) 5 £1,060
Tax Shelters
Venture Capital Trust (VCT) up to £200,000 £200,000
Enterprise Investment Scheme (EIS) up to £1,000,000 £1,000,000
Seed Enterprise Investment Scheme up to £100,000 £100,000
Social Investment Tax Relief £1,000,000 £1,000,000
Golden Handshake max. £30,000 £30,000

 

Notes

  1. Allowances for those born before 6 April 1938 (6 April 1948) are reduced by £1 for each £2 of excess income over £27,700 (£27,000) until the basic allowance is reached.
  2. Similar limits apply to the married couple’s allowance. The reduction in allowance is subject to a minimum level of £3,220. (For couples married before 5 December 2005, only the husband’s income is taken into account. For those married on or after 5 December 2005 or in a civil partnership, only the higher earner’s income is taken into account).
  3. The personal allowance, including the minimum age-related allowance, is reduced by £1 for every £2 that adjusted net income exceeds £100,000 regardless of the individual’s date of birth.
  4. Where there are several trusts created by the same settlor, the “standard rate band” is divided equally between them, subject to a minimum band of £200 for each trust.
  5. Available to spouses/civil partners born after 5 April 1935. The allowance is 10% of the personal allowance for those born after 5 April 1938. It allows a spouse or civil partner who is not liable to income tax above the basic rate to transfer this amount of their personal allowance to their spouse/civil partner. The recipient must not be liable to tax above the basic rate. The recipient is eligible to a tax reduction at 20% of the transferred amount.

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Capital Gains Tax

Capital gains tax rates and bands for 2015/16
On chargeable gains
Total taxable income and gains:up to £31,785from £31,786 18%28%
Annual exemption
– individual £11,100
– most trustees £5,550
Chattels exemption
(proceeds per item or set) £6,000

 

Entrepreneurs’ Relief

Qualifying gains will be taxed at 10%.

Claims may be made on more than one occasion up to a “lifetime” total of £10 million.

Notes

  1. Transfers between husband and wife or civil partners living together are generally exempt.
  2. Capital gains of all trusts for 2015/16 are taxed at the rate of 28%. Where there are several trusts created by the same settlor, the annual exemption is divided equally between them, subject to a minimum exemption of £1,110 for each trust.

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Corporation Tax

Up until 31 March 2015 there were two rates of corporation tax and one effective marginal rate. From 1 April 2015 the main rate and the small profits rate have been unified and are set at 20%.

Corporation tax rates and bands are as follows:

Financial Year to 31 March 2016 31 March 2015
Taxable profits
First £300,000 20% 20%
Next £1,200,000 20% 21.25%
Over £1,500,000 20% 21%

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Capital Allowances

Plant and Machinery:

Investment for use in Enterprise Zones, energy saving and environmentally beneficial equipment, new zero-emission goods vehicles, low CO2 emission (up to 75g/km) cars, natural gas/hydrogen refuelling equipment: First year allowance. 100%
Annual investment allowance (AIA)- on the first £500,000 of investment until 31 December 2015

(excludes cars and other expenditure already qualifying for 100% FYA)

100%*
Writing down allowance on expenditure not qualifying for AIA or FYA:
    Long-life assets, integral features of buildings, cars over 130g/km 8%
    Other plant and machinery 18%
Business premises renovation: max initial allowance 100%  

* Transitional rules may apply

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Value Added Tax

From 1 April 2015
Standard rate 20%
VAT fraction 1/6
Reduced rate 5%
Taxable Turnover Limits
Registration – last 12 months or next 30 days over £82,000 from 1 April 2015
Deregistration – next 12 months under £80,000 from 1 April 2015
Cash accounting scheme – up to £1,350,000
Optional flat rate scheme – up to £150,000
Annual accounting scheme – up to £1,350,000

VAT on fuel for private use in cars

Where businesses wish to reclaim the input VAT on fuel which has some degree of private use, they must account for output VAT for which they may use the flat rate valuation.

The table shows the VAT chargeable for quarters commencing on or after 1 May 2014. These rates were current at the date of publication. Please check with us for any updated rates from 1 May 2015.

CO2 emissions(g/km) Quarterly VAT
Flat Rate Valuation £ VAT on Charge £
0-50 156.00 26.00
51-75 156.00 26.00
76-94 156.00 26.00
95-99 156.00 26.00
100-104 156.00 26.00
105-109 156.00 26.00
110-114 156.00 26.00
115-199 156.00 26.00
120-124 156.00 26.00
125-129 234.00 39.00
130-134 251.00 41.83
135-139 266.00 44.33
140-144 282.00 47.00
145-149 297.00 49.50
150-154 313.00 52.17
155-159 328.00 54.67
160-164 345.00 57.50
165-169 360.00 60.00
170-174 376.00 62.67
175-179 391.00 65.17
180-184 408.00 68.00
185-189 423.00 70.50
190-194 439.00 73.17
195-199 454.00 75.67
200-204 470.00 78.33
205-209 485.00 80.83
210-214 502.00 83.67
215-219 517.00 86.17
220-224 533.00 88.83
225 or more 548.00 91.33

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Inheritance Tax

2015/16 2014/15
Standard threshold £325,000 £325,000
Combined threshold maximum for married couples and civil partners £650,000 £650,000
Rate of tax on balance:
    Chargeable lifetime transfersTransfers on, or within 7 years of, death 20%*40% 20%*40%
* A lower rate of 36% applies where 10% or more of a deceased person’s net estate is left to charity

 

All lifetime transfers not covered by exemptions and made within seven years of death will be added back into the estate for the purpose of calculating the tax payable. Tax attributable to such transfers is then subject to Taper Relief:

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

 

Main Reliefs
Business property:
– business or interest therein 100%
– qualifying shareholdings in unquoted* companies 100%
– land, buildings, machinery, or plant used by transferor’s controlled company or partnership 50%
Agricultural property 100% or 50%
*Unquoted companies include those listed on AIM

 

Main Exemptions

  1. Most transfers between spouses and civil partners.
  2. The first £3,000 of lifetime transfers in any tax year plus any unused balance from previous year.
  3. Gifts of up to but not exceeding £250 p.a. to any number of persons.
  4. Gifts in consideration of marriage or civil partnership of: up to £5,000 by a parent, up to £2,500 by a grandparent or great grandparent, or up to £1,000 by any other person.
  5. Gifts made out of income that form part of normal expenditure and do not reduce the standard of living.
  6. Gifts to charities, whether made during lifetime or on death.

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Vehicle Benefits

The taxable benefit is calculated as a percentage of the list price of the car, on the day before it was first registered, plus certain accessories. This percentage depends upon the rate at which the car emits carbon dioxide (CO2), and the fuel type.

From April 2015, the five year exemption for zero carbon and the lower rate for ultra-low carbon emission cars will come to an end. Two new bands will be introduced for ultra-low emission vehicles (ULEVs). These will be set at 0-50 g/km and 51-75 g/km. The appropriate percentages for the remaining bands will increase by 2% for cars emitting more than 75 g/km, to a new maximum of 37%.

You can find the appropriate percentage for 2015/16 using the following table:

CO2 emissions(g/km) Appropriate percentage
Petrol % Diesel %
0-50 5 8
51-75 9 12
76-94 13 16
95-99 14 17
100-104 15 18
105-109 16 19
110-114 17 20
115-119 18 21
120-124 19 22
125-129 20 23
130-134 21 24
135-139 22 25
140-144 23 26
145-149 24 27
150-154 25 28
155-159 26 29
160-164 27 30
165-169 28 31
170-174 29 32
175-179 30 33
180-184 31 34
185-189 32 35
190-194 33 36
195-199 34 37
200-204 35
205-209 36
210 or more 37

 

How to find out how much CO2 your company car emits – see:

  • the car’s V5 registration document
  • your dealer
  • the data pages of car magazines (current models)

 

Reliable emissions data is not widely available for cars registered before 1 January 1998.
For them, the following taxable percentages apply, regardless of fuel type:

Engine capacity Taxable %
Up to 1400cc 15%
1401 – 2000cc 22%
Over 2000cc 32%

 

Car fuel benefit

The taxable car fuel benefit, for 2015/16, is calculated by applying the CO2 based car benefit percentage to the car fuel benefit charge multiplier of £22,100.

If the employee pays for the full cost of all fuel for private journeys (usually including home to work) there will be no car fuel benefit. In all other cases the full tax charge will be due.

HMRC advisory mileage rates at the time of the Budget for employee private mileage reimbursement or employer reimbursement of business mileage in company cars are:

Fuel-Only Mileage Rates
Engine Size Petrol LPG
1400cc or less 11p 8p
1401cc – 2000cc 13p 10p
Over 2000cc 20p 14p
Engine Size Diesel
1600cc or less 9p
1601cc – 2000cc 11p
Over 2000cc 14p

 

Example: A company car driver has a car which, on the day before it was first registered, had a
list price of £21,000. It runs on petrol, and emits 177 g/km of CO2.

If we assume the driver pays tax at 40%, the 2015/16 tax bill on the car is: £21,000 x 30% x 40% = £2,520

If the employer provides any fuel used for private journeys and is not reimbursed for the cost, the 2015/16 tax bill for the fuel is: £22,100 x 30% x 40% = £2,652.

Company vans

The taxable benefit for the unrestricted use of company vans is £3,150 plus a further £594 of taxable benefit if fuel is provided by the employer for private travel.

Van and fuel charge Van Fuel Total
Tax (20% taxpayer) £630 £118.80 £748.80
Tax (40% taxpayer) £1,260 £237.60 £1,497.60
Tax (45% taxpayer) £1,417.50 £267.30 £1,684.80
Employer’s class 1A NICs £434.70 £81.97 £516.67

 

Van drivers can avoid a benefit charge if they agree not to use the van for personal journeys. Driving to and from work is acceptable so long as there is a reasonable amount of business use.

The flat rate of £3,150 is reduced by 80% to £630 for vans which cannot produce C02 engine emissions under any circumstances when driven. There is no fuel benefit for such vans.

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Mileage Allowances

It is quite normal practice for employees to be reimbursed at a reasonable mileage rate for business use of their own vehicles. The income tax and national insurance contributions (NICs) position is as follows:

A statutory system of Approved Mileage Allowance Payments (AMAPs) applies for employees using their own vehicles for business journeys, as follows:
Cars and vans:on the first 10,000 miles in the tax year

on each additional mile above this

45p per mile

25p per mile

Motorcycles 24p per mile
Bicycles 20p per mile

 

It is no longer possible to make a claim for tax relief based on the actual receipted bills, nor claim capital allowances or interest on loans related to car purchases.

Unless the employee is reimbursed at a rate higher than the AMAP, the payments do not need to be reported on a P11D. If the employer pays less than these rates, it is possible for the employee to claim income tax relief for the shortfall.

Rates of up to 5p per mile, per passenger, are also tax- and NICs- free when paid for the carriage of fellow employees on the same business trip. This now also covers volunteers who drive for hospital car services etc, even though they are not strictly employees.

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National Insurance Contributions

Class 1 (not contracted out) Employee (primary)
Payable on weekly earnings of
Below £112 (lower earnings limit) 0%
£112 – £155 (primary threshold) 0%*
£155.01 – £815 (upper earnings limit) 12%**
£156.01 – £815 (upper secondary threshold – under 21s) 12%
Above £815 2%**
* No NICs are actually payable but notional Class 1 NIC is deemed to have been paid; this protects certain state benefit entitlements.** Over state pension age, the employee contribution is generally nil
Employer (secondary)
Up to £156 (secondary threshold) Nil
Above £156 13.8%
£156.01 – £815 (upper secondary threshold – under 21s) 0%
Employment Allowance Up to £2,000 (per year)
Class 1A (on relevant benefits) 13.8%
Class 1B (on PAYE settlement arrangement) 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 annual profits)
£8,060 – £42,385 9%
Excess over £42,385 2%
*Exemption applies if state pension age was reached by 6 April 2015.

 

Note

For those earning between £112 per week and £770 per week, employers receive a rebate of 3.4% on contracted out salary related schemes, and employees a rebate of 1.4%.

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Key Dates & Deadlines

Payment Dates
Income Tax (including Class 4 NIC)
31 July 2015 2014/15 second payment on account
31 January 2016 2014/15 balancing payment, and2015/16 first payment on account
31 July 2016 2015/16 second payment on account
31 January 2017 2015/16 balancing payment, and2016/17 first payment on account
Class 1A NICs
19 July 2015 2014/15 payment due
Capital Gains Tax
31 January 2016 2014/15 Capital Gains Tax
31 January 2017 2015/16 Capital Gains Tax
Corporation Tax
9 months and one day after the end of the accounting period
Inheritance Tax
6 months after the end of the month of death.
For chargeable lifetime transfers, due date is six months after the end of the month in which the transfer was made.
Latest Filing/Issuing Deadlines – 2014/15 PAYE Returns
31 May 2015 Issue P60s to employees.
6 July 2015 P9D, P11D and P11Db – also issue copies to employeesForm 42 (reporting of employment-related securities)
2015 Self Assessment Tax Return (SATR)
31 October 2015 Last filing date – SATR Paper Version
30 December 2015 SATR Online if outstanding tax (subject to cap) to be included in 2016/17 PAYE code
31 January 2016 Last filing date – SATR Online

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Pension Premiums and Withdrawals

There is no financial limit on the amount that may be contributed to a registered pension scheme. The maximum amount on which an individual can claim tax relief in any tax year is the greater of the individual’s UK relevant earnings or £3,600 (gross). These three allowances may need to be taken into account: Default annual allowance (£40,000); Money Purchase annual allowance (£10,000); and Alternative annual allowance (£30,000).

The maximum age for tax relief is 74. The lifetime allowance charge applies to cumulative benefits exceeding £1.25m*. Inheritors can access pension funds worth up to £1.25m tax-free where savers die before reaching 75. Pensions inherited after the saver reaches 75 will be subject to recipient’s marginal rate of tax.

From April 2015 people aged 55 or over can withdraw any sum from their Defined Contribution pension savings. On most withdrawals 25% of the total will be tax-free with the rest subject to income tax at the pensioner’s marginal rate.

*Subject to transitional protection for excess amount.

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Chartable Giving

Gift Aid

  1. Individuals are able to claim higher rate relief on cash gifts and payments to charities under gift aid. Basic rate tax is treated as having been deducted, so you must pay enough tax for the year to cover the tax witheld from your Gift Aid payment.
  2. Special tax reliefs apply to gifts to charities of certain types of shares and securities, or land and buildings.
  3. Individuals have the opportunity to make a claim for charitable donations made in one tax year to be treated as if they had been made in the previous tax year. For example, a request could be made for Gift Aid payments made between 6 April 2015 and the date that the 2015 return is filed to be treated as if they were made in the year to 5 April 2015. This would mean that a payment could rank for higher rate tax relief for 2014/15, even if the donor is liable at basic rate only in 2015/16. The request would normally be made by completing the relevant box in the 2015 tax return, and the opportunity to carry back donations is lost once that return has been filed (provided this is no later than 31 October 2015 or 31 January 2016, as appropriate). It is not possible to amend the 2015 tax return in order to carry back a donation.

Give As You Earn

  1. Employees may authorise participating employers to deduct donations from their gross salary for forwarding to their nominated charities.
  2. Employees receive tax relief in full on their donations.

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Savings & Investments

Individual Savings Accounts (ISAs)
ISAs 2015/16
Overall investment limit £15,240
Junior ISA limit £4,080

 

Notes

  1. Investments in ISAs are free of income tax and capital gains tax.
  2. Those aged 16-17 can invest in a cash ISA, in addition to a Junior ISA.
  3. ISAs allow you to take your money out at any time without losing tax relief and furthermore you are not required to declare income and capital gains from ISA savings.
  4. Transitional rules may apply.

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Some Useful Rates

Weekly Benefit
2015/16 2014/15
Basic Retirement Pension
Single person £115.95 £113.10
Couple £185.45 £180.90
Pension Credit Standard Minimum Guarantee
Single person £151.20 £148.35
Couple £230.85 £226.50
Child Benefit
First eligible child £20.70 £20.50
Each subsequent child £13.70 £13.55
Statutory Sick Pay (SSP)
Average weekly earnings £112 or over (2014/15 £111) £88.45 £87.55
Statutory Maternity Pay (SMP)
90% of average weekly pay First 6 weeks First 6 weeks
Lower of £139.58 (2014/15 £138.18) or 90% average weekly earnings
Minimum rate £100.80 £99.90
Statutory Adoption Pay (SAP) 39 weeks 39 weeks
Statutory Paternity Pay (SPP)* 2 weeks 2 weeks
Both SAP and SPP
Lower of £139.58 (2014/15 £138.18) or 90% average weekly earnings
Minimum rate £100.80 £99.90
*Additional statutory paternity pay (ASPP) has been replaced by shared parental leave.
Jobseeker’s Allowance
Single person (25 or over) £73.10 £72.40
Couple (both 18 or over) £114.85 £113.70
National Minimum Wage From 1 October 2015 From 1 October 2014
21 and over £6.70 £6.50
18 – 20 £5.30 £5.13
16 and 17 £3.87 £3.79
Apprentices* £3.30 £2.73
*Rate applies to apprentices under 19, or those 19 and over in the first year of apprenticeship.
Universal Credt (monthly rates)
Single person (25 or over) £317.82 £314.67
Couple (where one or both 25 or over) £498.89 £493.95

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Stamp Taxes

The rate of stamp duty / stamp duty reserve tax on the transfer of shares and securities is generally payable at 0.5%.

Stamp Duty Land Tax (SDLT)

On the transfer of property♦ the stamp duty land tax is: Residential Non-Residential
Value up to £125,000* 0% 0%
Over £125,000*– £250,000 2% 1%
Over £250,000 – £500,000 5% 3%
Over £500,000 – £925,000† 5% 4%
Over £925,000† – £1,500,000† 10%
Over £1,500,000† 12%
Residential SDLT calculated on the consideration falling within each band. Non-residential SDLT is charged at a single rate depending on the total purchase price. * Non-residential £150,000. † Residential Property Only. ♦ Land and buildings in England, Wales and Northern Ireland.

 

New Leases

SDLT is charged according to the net present value of all the rental payments over the term of the lease (NPV), with a single rate of 1% on residential NPV’s over £125,000 and on non-residential NPV’s over £150,000.

VAT is excluded from treatment as consideration provided the landlord has not opted to charge VAT by the time the lease is granted.

Lease premiums

SDLT on premiums is the same as for transfers of land (except that the zero rate does not apply where the annual rent of a non-residential property is £1,000 or more.)

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Land and Buildings Transaction Tax

On the transfer of property in Scotland, the Land and Buildings Transaction Tax is:

Residential
Value up to £145,000 0%
Over £145,000 – £250,000 2%
Over £250,000 – £325,000 5%
Over £325,000 – £750,000 10%
Over £750,000 12%

 

Non-residential
Value up to £150,000 0%
Over £150,000 – £350,000 3%
Over £350,000 4.5%

 

The rates apply to the portion of the total value which falls within each band in respect of transactions from 1 April 2015.

 

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