Tax Rates 2017/18
Contents
For quick navigation through this post, please click on the links below.
- Introduction
- Income Tax
- Capital Gains Tax
- Corporation Tax
- Capital Allowances
- Value Added Tax
- Inheritance Tax
- Vehicle Benefits
- Mileage Allowances
- National Insurance Contributions
- Key Dates and Deadlines
- Pension Contributions
- Charitable Giving
- Individual Savings Accounts
- Some Useful Rates
- Stamp Taxes
- Land and Buildings Transaction Tax
Introduction
Our Tax Rates Centre provides a summary of some of the essential tax rates, dates and figures for 2017/18.
2017/18 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.
Income Tax
| Income tax rates | 2017/18 | 2016/17 | |
|---|---|---|---|
| Starting rate limit (savings income) | *£5,000 | *£5,000 | |
| Starting rate | *0% | *0% | |
| Basic rate band – income up to | **£33,500 | £32,000 | |
| Basic rate | 20% | 20% | |
| Dividend ordinary rate | ***7.5% | ***7.5% | |
| Higher rate – income over | **£33,500 | £32,000 | |
| 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 | ***38.1% | ***38.1% | |
| * If an individual’s taxable non-savings income exceeds the starting rate limit, then the starting rate will not be available for savings income. £1,000 of savings income for basic rate taxpayers (£500 for higher rate) may be tax-free. ** For Scottish taxpayers only the limit is £31,500. *** The first £5,000 of dividends are tax-free | |||
| Personal allowance (PA) | |||
| Personal Allowance | 1 | £11,500 | £11,000 |
| Blind person’s allowance | £2,320 | £2,290 | |
| Married couple’s allowance (MCA) | |||
| Either partner born before 6 April 1935 (relief restricted to 10%) | 2 | £8,445 | £8,355 |
| Transferable tax allowance (‘Marriage Allowance’) | |||
| For certain married couples and civil partners born after 5 April 1935 (relief 20%) | 3 | £1,150 | £1,100 |
| 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 | |
Notes
- Where adjusted net income exceeds £100,000, PA is reduced in the same way until it is nil regardless of the individual’s date of birth.
- Allowances are reduced by £1 for every £2 that adjusted net income exceeds £28,000 (£27,700 2016/17) to a minimum MCA of £3,260 (£3,220 2016/17).
- Available to spouses/civil partners born after 5 April 1935, the allowance is 10% of the standard personal allowance. 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. Relief is given as a tax reduction at 20% of the transferred amount.
Capital Gains Tax
| Capital gains tax rates and bands for 2017/18 | |
|---|---|
| On chargeable gains | |
| Total taxable income and gains: Up to higher rate threshold From higher rate threshold | 10%* 20%* |
| Trust rate *Higher rates (18%/28%) may apply to the disposal of certain residential property and carried interest. | 20%* |
| Annual exemption | |
| – individual | £11,300 |
| – most trustees | £5,650 |
| Transfers between spouses or civil partners living together are generally exempt. | |
| Chattels exemption | |
| (proceeds per item or set) | £6,000 |
Entrepreneurs’ Relief and Investors’ 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.
Corporation Tax
| Financial Year to | 31 March 2018 | 31 March 2017 |
|---|---|---|
| Corporation Tax rate | 19% | 20% |
Capital Allowances
Plant and Machinery:
| Investment for use in Enterprise Zones, energy saving and environmentally beneficial equipment, low CO2 emission (up to 75g/km*) cars, natural gas/hydrogen refuelling equipment: First year allowance (FYA). | 100% |
| Annual investment allowance (AIA) – on the first £200,000 of investment (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% |
* The emissions figures are reduced to 50 and 110g/km respectively for expenditure incurred on or after 1 April 2018.
Value Added Tax
| From | 1 April 2017 |
|---|---|
| Standard rate | 20% |
| VAT fraction | 1/6 |
| Reduced rate | 5% |
| Current Turnover Limits | |
| Registration – last 12 months or next 30 days over | £85,000 |
| Deregistration – next 12 months under | £83,000 |
| 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 2016.
| CO2 emissions (g/km) | Quarterly VAT | |
|---|---|---|
| Flat Rate Valuation £ | VAT on Charge £ | |
| 0-124 | 116 | 19.33 |
| 125-129 | 175 | 29.17 |
| 130-134 | 186 | 31.00 |
| 135-139 | 197 | 32.83 |
| 140-144 | 209 | 34.83 |
| 145-149 | 221 | 36.83 |
| 150-154 | 233 | 38.83 |
| 155-159 | 245 | 40.83 |
| 160-164 | 256 | 42.67 |
| 165-169 | 268 | 44.67 |
| 170-174 | 279 | 46.50 |
| 175-179 | 291 | 48.50 |
| 180-184 | 303 | 50.50 |
| 185-189 | 314 | 52.33 |
| 190-194 | 326 | 54.33 |
| 195-199 | 338 | 56.33 |
| 200-204 | 350 | 58.33 |
| 205-209 | 362 | 60.33 |
| 210-214 | 373 | 62.17 |
| 215-219 | 384 | 64.00 |
| 220-224 | 396 | 66.00 |
| 225 and above | 408 | 68.00 |
Inheritance Tax
| 2017/18 | 2016/17 | |
|---|---|---|
| Standard threshold | £325,000 | £325,000 |
| For 2017/18, a further nil rate band of £100,000 may be available in relation to current or former residences. Nil rate bands of surviving spouses/civil partners may be increased by unused nil rate bands of deceased spouses/civil partners. | ||
| Rate of tax on balance: | ||
| Chargeable lifetime transfers Transfers 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
- Most transfers between spouses and civil partners.
- The first £3,000 of lifetime transfers in any tax year plus any unused balance from previous year.
- Gifts of up to but not exceeding £250 p.a. to any number of persons.
- 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.
- Gifts made out of income that form part of normal expenditure and do not reduce the standard of living.
- Gifts to charities, whether made during lifetime or on death.
Vehicle Benefits
Chargeable on directors and employees.
Car Benefit
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.
You can find the appropriate percentage for 2017/18 using the following table:
| CO2 emissions (g/km) | Appropriate percentage | |
|---|---|---|
| Petrol % | Diesel % | |
| 0-50 | 9 | 12 |
| 51-75 | 13 | 16 |
| 76-94 | 17 | 20 |
| 95-99 | 18 | 21 |
| 100-104 | 19 | 22 |
| 105-109 | 20 | 23 |
| 110-114 | 21 | 24 |
| 115-119 | 22 | 25 |
| 120-124 | 23 | 26 |
| 125-129 | 24 | 27 |
| 130-134 | 25 | 28 |
| 135-139 | 26 | 29 |
| 140-144 | 27 | 30 |
| 145-149 | 28 | 31 |
| 150-154 | 29 | 32 |
| 155-159 | 30 | 33 |
| 160-164 | 31 | 34 |
| 165-169 | 32 | 35 |
| 170-174 | 33 | 36 |
| 175-179 | 34 | 37 |
| 180-184 | 35 | |
| 185-189 | 36 | |
| 190 and above | 37 | |
CO2 emission information
For cars registered from March 2001, the definitive CO2 figure used to calculate company car tax will be that shown on the car’s V5 (Registration Document). The Vehicle Certification Agency (VCA) supplies CO2 (and other emissions) data. Information on CO2 emissions for both new (unregistered) and used (registered) cars can be found at http://carfueldata.direct.gov.uk/search-new-or-used-cars.aspx.
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 2017/18, is calculated by applying the CO2 based car benefit percentage to the car fuel benefit charge multiplier of £22,600.
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.
| Fuel-Only Mileage Rates | ||
|---|---|---|
| HMRC advisory mileage rates from 1 March 2017 for employee private mileage reimbursement or employer reimbursement of business mileage in company cars are: | ||
| Engine Size | Petrol | LPG |
| 1400cc or less | 11p | 7p |
| 1401cc – 2000cc | 14p | 9p |
| Over 2000cc | 22p | 14p |
| Engine Size | Diesel | |
| 1600cc or less | 9p | |
| 1601cc – 2000cc | 11p | |
| Over 2000cc | 13p | |
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 2017/18 tax bill on the car is: £21,000 x 34% x 40% = £2,856
If the employer provides any fuel used for private journeys and is not reimbursed for the cost, the 2017/18 tax bill for the fuel is: £22,600 x 34% x 40% = £3,073.60.
Company vans
The taxable benefit for the unrestricted use of company vans is £3,230 plus a further £610 of taxable benefit if fuel is provided by the employer for private travel.
| Van and fuel charge | Van | Fuel | Total |
|---|---|---|---|
| Tax (20% taxpayer) | £646.00 | £122.00 | £768.00 |
| Tax (40% taxpayer) | £1,292.00 | £244.00 | £1,536.00 |
| Tax (45% taxpayer) | £1,453.50 | £274.50 | £1,728.00 |
| Employer’s class 1A NICs | £445.74 | £84.18 | £529.92 |
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 £3,230 is reduced by 80% to £646 for vans which cannot produce C02 engine emissions under any circumstances when driven. There is no fuel benefit for such vans.
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 |
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 also covers volunteers who drive for hospital car services etc, even though they are not strictly employees.
National Insurance Contributions
| Class 1 | Employee (primary) |
|---|---|
| Payable on weekly earnings of | |
| Below £113 (lower earnings limit) | Nil |
| £113 – £157 (primary threshold) | 0%* |
| £157.01 – £866 (upper earnings limit) | 12%** |
| Above £866 | 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 £157 (secondary threshold) | Nil |
| Above £157 | 13.8% |
| £157.01 – £866 (upper secondary threshold – under 21s) | 0% |
| £157.01 – £866 (apprentice upper secondary threshold for under 25s) | 0% |
| Employment Allowance | Up to £3,000 (per year) |
| Class 1A (on relevant benefits) | 13.8% |
| Class 1B (on PAYE settlement arrangement) | 13.8% |
| Class 2 (Self employed) | £2.85 per week |
| Small profits threshold | £6,025 per annum |
| Class 3 (Voluntary) | £14.25 per week |
| Class 4* (Self employed on annual profits) | |
| £8,164 – £45,000 | 9% |
| Excess over £45,000 | 2% |
| *Exemption applies if state pension age was reached by 6 April 2017. | |
Key Dates and Deadlines
| Payment Dates | |
|---|---|
| Income Tax and National Insurance Contributions | |
| 31 July 2017 | 2016/17 second payment on account |
| 31 January 2018 | 2016/17 balancing payment, and 2017/18 first payment on account |
| 31 July 2018 | 2017/18 second payment on account |
| 31 January 2019 | 2017/18 balancing payment, and 2018/19 first payment on account |
| Class 1A NICs | |
| 19 July 2017 | 2016/17 payment due |
| Capital Gains Tax | |
| 31 January 2018 | 2016/17 Capital Gains Tax |
| 31 January 2019 | 2017/18 Capital Gains Tax |
| Corporation Tax | |
| 9 months and one day after the end of the accounting period (or by quarterly instalments if large company) | |
| 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 – 2016/17 PAYE Returns | |
| 31 May 2017 | Issue P60s to employees. |
| 6 July 2017 | P11D and P11Db – also issue copies to employees Deadline for employment related securities returns |
| 2017 Self Assessment Tax Return (SATR) | |
| 31 October 2017 | Last filing date – SATR Paper Version |
| 30 December 2017 | SATR Online if outstanding tax (subject to cap) to be included in 2018/19 PAYE code |
| 31 January 2018 | Last filing date – SATR Online |
Pension Contributions
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).
If total pension input exceeds the annual allowance (£40,000) there may be a tax charge on the excess. Where the annual allowance limit is not fully used it may be possible to carry the unused amount forward for three years.
The annual allowance may be reduced by £1 for every £2 of adjusted income over £150,000 to a minimum of £10,000.
| Maximum age for tax relief | 74 |
| Minimum age for taking benefits | 55 |
| Lifetime allowance charge | |
| – lump sum paid | 55% |
| – monies retained | 25% |
| on cumulative benefits exceeding | £1 million* |
| Maximum tax-free lump sum | 25%* |
*Subject to transitional protection for excess amount.
Charitable Giving
Gift Aid
- 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.
- Special tax reliefs apply to gifts to charities of certain types of shares and securities, or land and buildings.
- 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 2017 and the date that the 2017 return is filed to be treated as if they were made in the year to 5 April 2017. This would mean that a payment could rank for higher rate tax relief for 2016/17, even if the donor is liable at basic rate only in 2017/18. The request would normally be made by completing the relevant box in the 2017 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 2017 or 31 January 2018, as appropriate). It is not possible to amend the 2017 tax return in order to carry back a donation.
Give As You Earn (Payroll Giving)
- Employees may authorise participating employers to deduct donations from their gross salary for forwarding to their nominated charities.
- Employees receive tax relief in full on their donations.
Tax-Free Savings and Investments
| Individual Savings Accounts (ISAs) 2017/18 | |
|---|---|
| Overall investment limit | £20,000 |
| Junior ISA limit | £4,128 |
| Help to Buy ISA monthly subscription limit (initial deposit limit £1,000) | £200 |
| Lifetime ISA annual subscription limit | £4,000 |
Notes
- Investments in ISAs are free of income tax and capital gains tax.
- Those aged 16-17 can invest in a cash ISA, in addition to a Junior ISA.
- 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.
Some Useful Rates
| Weekly Benefit | |||
|---|---|---|---|
| 2017/18 | 2016/17 | ||
| Basic Retirement Pension | |||
| Single person | £122.30 | £119.30 | |
| Couple | £195.60 | £190.80 | |
| Pension Credit Standard Minimum Guarantee | |||
| Single person | £159.35 | £155.60 | |
| Couple | £243.25 | £237.55 | |
| New State Pension | |||
| £159.55 | £155.65 | ||
| Child Benefit | |||
| First eligible child | £20.70 | £20.70 | |
| Each subsequent child | £13.70 | £13.70 | |
| Statutory Sick Pay (SSP) | |||
| Average weekly earnings £113 or over (2016/17 £112) | £89.35 | £88.45 | |
| Statutory Maternity Pay (SMP) | |||
| 90% of average weekly pay | First 6 weeks | First 6 weeks | |
| Lower of £140.98 (2016/17 £139.58) or 90% average weekly earnings | Next 33 weeks | Next 33 weeks | |
| Minimum rate | £101.70 | £100.80 | |
| Statutory Adoption Pay (SAP) | 39 weeks | 39 weeks | |
| Statutory Paternity Pay (SPP)* | 2 weeks | 2 weeks | |
| Shared Parental Pay | Up to 37 weeks, depending on mother’s unused SMP period | Up to 37 weeks, depending on mother’s unused SMP period | |
| SAP, SPP and Shared Parental Pay | |||
| Lower of £140.98 (2016/17 £139.58) or 90% average weekly earnings | |||
| Minimum rate | £101.70 | £100.80 | |
| Jobseeker’s Allowance | |||
| Single person (25 or over) | £73.10 | £73.10 | |
| Couple (both 18 or over) | £114.85 | £114.85 | |
| National Living Wage | From 1 April 2017 | From 1 April 2016 | |
| Age 25 and over | £7.50 | £7.20 | |
| National Minimum Wage | From 1 April 2017 | From 1 Oct 2016 | |
| 21 – 24 | £7.05 | £6.95 | |
| 18 – 20 | £5.60 | £5.55 | |
| 16 and 17 | £4.05 | £4.00 | |
| Apprentices* | £3.50 | £3.40 | |
| *Rate applies to apprentices under 19, or those 19 and over in the first year of apprenticeship. | |||
| Universal Credit (monthly rates) | |||
| Single person (25 or over) | £317.82 | £317.82 | |
| Couple (where one or both 25 or over) | £498.89 | £498.89 | |
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 in England, Wales and Northern Ireland, the SDLT is:
| Residential Property | |
|---|---|
| Value up to £125,000 | 0% |
| Over £125,000 – £250,000 | 2% |
| Over £250,000 – £925,000 | 5% |
| Over £925,000 – £1,500,000 | 10% |
| Over £1,500,000 | 12% |
| In most cases these rates also apply to property lease purchases but an additional 1% is due on new leases where the net present value (NPV) of rent is more than £125,000. The purchase of additional residential properties may result in 3% being added to each of the above rates. | |
| Non-residential | |
|---|---|
| Value up to £150,000 | 0% |
| Over £150,000 – £250,000 | 2% |
| Over £250,000 | 5% |
| In most cases these rates also apply to property lease purchases but an additional 1% is due on new leases with a NPV of more than £150,000 and this rises to 2% on leases with an NPV greater than £5m. | |
Land and Buildings Transaction Tax (LBTT)
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. Additional LBTT of 3% may apply to the purchase of additional residential properties.
