Tax Rates Centre 2014

Contents


Introduction

Our Tax Rates Centre provides a summary of some of the essential tax rates, dates and figures for 2014/15.

2014/15 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

Income tax rates Note 2014/15 2013/14
Basic rate band – income up to £31,865 £32,010
  Starting rate for savings *10% *10%
  Basic rate 20% 20%
  Dividend ordinary rate 10% 10%
Higher rate – income over £31,865 £32,010
  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 is for savings income up to the starting rate limit of £2,880 (£2,790) within the basic rate band. The rate applies to any balance of the limit remaining after allocating taxable non-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 £10,000 £9,440
Born after 5 April 1938 and before 6 April 1948 1,3 £10,500 £10,500
Born before 6 April 1938 1,3 £10,660 £10,660
Blind person’s allowance £2,230 £2,160
Married couple’s allowance (MCA)
Either partner born before 6 April 1935 (relief restricted to 10%) 2,3 £8,165 £7,915
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
Golden Handshake max. £30,000 £30,000
Rent a Room – exempt on gross annual rent up to £4,250 £4,250
Construction Industry Scheme deduction rate:
Standard (registered) 20% 20%
Higher (not registered) 30% 30%

 

Notes

  1. The higher rates of personal allowances are reduced by £1 for each £2 of excess income over £27,000 (£26,100) 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 £3,040. (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.

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Capital Gains Tax

Capital gains tax rates and bands for 2014/15
On chargeable gains
Total taxable income and gains:up to £31,865from £31,866 18%28%
Annual exemption
– individual £11,000
– most trustees £5,500
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 2014/15 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 £1,090 for each trust.

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Corporation Tax

Corporation tax rates and bands are as follows:

Financial Year to 31 March 2015 31 March 2014
Taxable profits
First £300,000 20% 20%
Next £1,200,000 21.25% 23.75%
Over £1,500,000 21% 23%

 

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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 95g/km) cars, natural gas/hydrogen refuelling equipment: First year allowance. 100%
Annual investment allowance (AIA)- on the first £500,000 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%
Business premises renovation: max initial allowance 100%  

* Transitional rules may apply

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Value Added Tax

 

From 1 April 2014
Standard rate 20%
VAT fraction 1/6
Reduced rate 5%
Taxable Turnover Limits
Registration – last 12 months or next 30 days over £81,000 from 1 April 2014
Deregistration – next 12 months under £79,000 from 1 April 2014
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.

CO2 emissions(g/km) Quarterly VAT
Flat Rate Charge £ VAT on Charge £
Up to 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

 

2014/15 2013/14
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 50% or 100%
*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

Chargeable on employees earning £8,500 or over (including benefits), and directors.

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.

For cars which cannot produce CO2 engine emissions under any circumstances when driven (‘zero emission cars’, including those powered solely by electricity), the appropriate percentage is reduced to 0%, thereby reducing the car benefit charge to nil.

For cars emitting between 1 and 75g/km the appropriate percentage is reduced to 5% (8% for diesel) for 5 years from 6 April 2010.

You can find the appropriate percentage for 2014/15 using the following table:

CO2 emissions(g/km) Appropriate percentage
Petrol % Diesel %
Zero 0 0
Up to 75 5 8
76-94 11 14
95-99 12 15
100-104 13 16
105-109 14 17
110-114 15 18
115-119 16 19
120-124 17 20
125-129 18 21
130-134 19 22
135-139 20 23
140-144 21 24
145-149 22 25
150-154 23 26
155-159 24 27
160-164 25 28
165-169 26 29
170-174 27 30
175-179 28 31
180-184 29 32
185-189 30 33
190-194 31 34
195-199 32 35
200-204 33
205-209 34
210 or more 35

 

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 2014/15, is calculated by applying the CO2 based car benefit percentage to the car fuel benefit charge multiplier of £21,700.

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 at the time of the Budget for employee private mileage reimbursement or employer reimbursement of business mileage in company cars are:
Engine Size Petrol LPG
1400cc or les4 15p 9p
1401cc – 2000cc 16p 11p
Over 2000cc 24p 17p
Engine Size Diesel
1600cc or less 12p
1601cc – 2000cc 14p
Over 2000cc 17p

 

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 2014/15 tax bill on the car is: £21,000 x 28% x 40% = £2,352

If the employer provides any fuel used for private journeys and is not reimbursed for the cost, the 2014/15 tax bill for the fuel is: £21,700 x 28% x 40% = £2,430.40.

Company vans

The taxable benefit for the unrestricted use of company vans is £3,090 plus a further £581 of taxable benefit if fuel is provided by the employer for private travel.

Van and fuel charge Van Fuel Total
Tax (20% taxpayer) £618 £116.20 £734.20
Tax (40% taxpayer) £1,236 £232.40 £1,468.40
Tax (45% taxpayer) £1,390.50 £261.45 £1,651.95
Employer’s class 1A NICs £426.42 £80.18 £506.60

 

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 £3,090 is reduced to nil 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 yearon each additional mile above this 45p per mile25p 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 £111 (lower earnings limit) 0%
£111 – £153 (primary threshold) 0%*
£153.01 – £805 (upper earnings limit) 12%**
Above £805 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 £153 (secondary threshold) Nil
Above £153 13.8%
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) £2.75 per week
Limit of net earnings for exception £5,885 per annum
Class 3 (Voluntary) £13.90 per week
Class 4* (Self employed on profits)
£7,956 – £41,865 9%
Excess over £41,865 2%
*Exemption applies if state pension age was reached by 6 April 2014.

 

Note

For those earning between £111 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 and Deadlines

Payment Dates
Income Tax (including Class 4 NIC)
31 July 2014 2013/14 second payment on account
31 January 2015 2013/14 balancing payment, and2014/15 first payment on account
31 July 2015 2014/15 second payment on account
31 January 2016 2014/15 balancing payment, and2015/16 first payment on account
Class 1A NICs
19 July 2014 2013/14 payment due
Capital Gains Tax
31 January 2015 2013/14 Capital Gains Tax
31 January 2016 2014/15 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 – 2013/14 PAYE Returns
31 May 2014 Issue P60s to employees.
6 July 2014 P9D, P11D and P11Db – also issue copies to employeesForm 42 (reporting of employment-related securities)
2014 Self Assessment Tax Return (SATR)
31 October 2014 Last filing date – SATR Paper Version
30 December 2014 SATR Online if outstanding tax (less than £3,000) to be included in 2015-16 PAYE code
31 January 2015 Last filing date – SATR Online

 

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Pension Premiums

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 of £40,000 there may be a tax charge on the excess.

Maximum age for tax relief 74
Minimum age for taking benefits 55
Lifetime allowance charge – lump sum paid 55%
Lifetime allowance charge – monies retained 25%
on cumulative benefits exceeding £1,250,000*
Maximum tax-free lump sum 25%*

 

*Subject to transitional protection for excess amount.

Note – For most pension arrangements, the total pension input is the aggregate of contributions paid into all the individual’s pension savings during the relevant pension input period (PIP). Contributions should be the gross amount (i.e. including the tax relief attaching to the contributions). The PIP is usually the year to the anniversary date which falls within the relevant tax year. There are special rules for defined benefit arrangements.

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Charitable 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 2014 and the date that the 2014 return is filed to be treated as if they were made in the year to 5 April 2014. This would mean that a payment could rank for higher rate tax relief for 2013/14, even if the donor is liable at basic rate only in 2014/15. The request would normally be made by completing the relevant box in the 2014 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 2014 or 31 January 2015, as appropriate). It is not possible to amend the 2014 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 and Investments

ISAs

Individual Savings Accounts (ISAs)
ISAs 2014/15 To 30 June 2014 From 1 July 2014
Overall Investment limit £11,880* £15,000
Junior ISA limit £3,840 £4,000

*Including cash maximum of £5,940

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
2014/15 2013/14
Basic Retirement Pension
Single person £113.10 £110.15
Couple £180.90 £176.15
Child Benefit
First eligible child £20.50 £20.30
Each subsequent child £13.55 £13.40
Statutory Sick Pay (SSP)
Average weekly earnings £111 or over (2013/14 £109) £87.55 £86.70
Statutory Maternity Pay (SMP)
90% of average weekly pay First 6 weeks First 6 weeks
Lower of £138.18 (2013/14 £136.78) or 90% average weekly earnings
Minimum rate £99.90 £98.10
Statutory Adoption Pay (SAP) 39 weeks 39 weeks
Statutory Paternity Pay (SPP)* 2 weeks 2 weeks
Both SAP and SPP
Lower of £138.18 (2013/14 £136.78) or 90% average weekly earnings
Minimum rate £99.90 £98.10
*Additional statutory paternity pay (ASPP) may be available in certain circumstances.
Jobseeker’s Allowance
Single person (25 or over) £72.40 £71.70
Couple (both 18 or over) £113.70 £112.55
National Minimum Wage** From 1 October 2014 From 1 October 2013
21 and over £6.50 £6.31 p.h.
18 – 20 £5.13 £5.03 p.h.
16 and 17 £3.79 £3.72 p.h.
Apprentices** £2.73 £2.68 p.h.
**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) £314.67 £311.55
Couple (where one or both 25 or over) £493.95 £489.06

 

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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)

Transfers of property are subject to SDLT at the following rates:
Value up to £125,000 (£150,000 for non-residential property) Nil
Over £125,000 (£150,000) to £250,000 1%
Over £250,000 to £500,000 3%
Over £500,000 – £1,000,000 * 4%
Over £1,000,000 * – £2,000,000 * 5%*
Over £2,000,000* 7%*
* Residential property only. A 15% rate will apply to properties over £500,000 purchased by certain “non-natural persons”.

 

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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