HMRC RATES AND ALLOWANCES 2016/17

The below are the rates and allowances as confirmed by the Chanellor of exchequer (HM treasurer) per his budget on 16 March 2016

HM Treasurer

2015/16 2016/17
£ £
Income tax rates – (non-dividend income)
10% lower rate tax – savings rate only Up to 5,000 Up to 5,000
20% basic rate tax Up to 31,785 Up to 32,000
40% higher rate tax 31,786 – 150,000 32,001 to 150,000
45% additional rate tax Above £150,000 Above £150,000
From 2008-09 10% starting rate applies to savings income only and will not apply if non-savings income exceeds threshold.
Income tax rates – (dividend income)
10% rate Up to 31,785 n/a
32.5% higher dividend rate 31,786 – 150,000 n/a
37.5% additional dividend rate Above £150,000 n/a
Income tax rates – (dividend income new rules from 5/4/2016)
Up to £ 5000 n/a 0%
£ 5000 – £ 32,000 n/a 7.5%
£32,001 – £150,000 n/a 32.5%
Above £ 150,000 n/a 38.1%
From April 2016, notional 10% tax credit on dividends will be abolished
Child benefit/Guardian’s allowance rates
Higher rate (eldest child only) (per week) 20.70 20.70
Other children 13.70 13.70
Guardian’s allowance 16.55 16.55
An income tax charge will apply to taxpayers with income exceeding £50,000 in a tax year, when child benefit is also received by them or their partner. The charge will reduce the financial benefit of receiving child benefit for those with income between £50,000 and £60,000 and remove it completely for taxpayers with income above £60,000.
Personal allowances
Personal allowance those born after 5 April 1948 10,600 11,000
Personal allowance those born between 6 April 1938 and 5 April 1948 – note 2 10,600 n/a
Personal allowance those born before 6 April 1938 – note 2 10,660 n/a
Married couple’s allowance those born before 6 April 1935 – note 3 8,355 8,355
Married couple’s allowance – minimum amount – note 3 3,220 3,220
Transferable married allowance 1,060 1,100
Micro entrepreneurs allowance
Individuals making property or trading incomes below the level of the allowance would no longer need to declare or pay tax, while those who exceeded the level from their online activity can benefit by simply deducting the allowance instead of calculating their exact expenses. n/a Allowance – £ 1,000
Income limit – note 2 100,000 100,000
Income limit for personal allowances (born before 6 April 1948) 27,700 n/a
Blind person’s allowance 2,290 2,290
Rent-a-room relief 4,250 7,500
Transferable tax allowance for married couples and civil partners 1,060 1,100
Personal savings allowance for basic rate tax payers – note 4 n/a 1,000
Personal savings allowance for higher rate tax payers – note 4 n/a 500
1 Abatement of personal allowance will apply of £1 for every £2 of taxable income in excess of income limit.

2 From 2016-17 onwards, all individuals will be entitled to the same personal allowance, regardless of the individuals’ date of birth. This allowance is subject to the £100,000 income limit which applies regardless of the individual’s date of birth

3 This allowance is subject to the £27,700 income limit. The individual’s married couple’s allowance is reduced by £1 for every £2 above the limit. That reduction only applies after any reduction to their personal allowance. The relief for this allowance is given at 10%

4 Basic rate tax will no longer be deducted from personal savings interest.

 

 

National insurance
Lower earnings limit, primary Class 1 (per week) 112 112
Upper earnings limit, primary Class 1 (per week) 815 827
Apprentice upper secondary threshold (AUST) for under 21s/ 25s 815 827
Primary threshold (per week) 155 155
Secondary threshold (per week) 156 156
Employment allowance (per year per employer) – note 2 2,000 3,000
Employee’s primary Class 1 rate between primary threshold and upper earnings limit 12% 12%
Employee’s primary Class 1 rate above upper earnings limit 2% 2%
Married woman’s reduced rate between primary threshold and upper earnings limit 5.85% 5.85%
Married woman’s rate above upper earnings limit 2.00% 2.00%
Employer’s secondary Class 1 rate above secondary threshold 13.80% 13.80%
Employer’s secondary Class 1 rate above secondary threshold (contracted out) 10.40% n/a
Class 2 rate (per week where profits are above small profits threshold) 2.80 2.80
Class 2 small profits threshold (per year) 5,965 5,965
Special Class 2 rate for share fishermen (per week) 3.45 3.45
Special Class 2 rate for volunteer development workers 5.60 5.60
Class 3 rate (per week) 14.10 14.10
Class 4 lower profits limit 8,060 8,060
Class 4 upper profits limit 42,385 43,000
Class 4 rate between lower profits limit and upper profits limit 9.00% 9.00%
Class 4 rate above upper profits limit 2.00% 2.00%
1 From April 2016 employers of apprentices under the age of 25 will no longer be required to

pay secondary Class 1 (employer) National Insurance contributions (NICs) on earnings up to

the Upper Earnings Limit (UEL), for those employees.

2 From April 2016,companies where the director is the sole employee will no longer be able to claim the
Employment Allowance

Pensions
Annual allowance 40,000 40,000
Lifetime allowance 1,250,000 1,000,000
The Finance Bill 2015 provides that from tax year 2016/17 the annual allowance for those earning above £150,000 is to be reduced on a tapering basis so that it reduces to £10,000 for those earning above £210,000. For every £2 of income above £150,000, an individual’s annual allowance will reduce by £1.
Relief’s and incentives
Enterprise Investment Scheme (EIS) – maximum 1,000,000 1,000,000
Venture Capital Trust (VCT) – maximum 200,000 200,000
Enterprise Management Incentive Scheme (EMI) – employee limit 250,000 250,000
Seed Enterprise Investment Scheme (SEIS) – maximum 100,000 100,000
Income tax relief on EIS schemes 30% 30%
Income tax relief on VCT schemes 30% 30%
Income tax relief on SEIS schemes 50% 50%
Individual Savings Account (ISA):
New ISA (NISA) limits
New ISA (NISA) annual limit 15,240 15,240
New Junior ISA investment annual limit 4,080 4,080
New child value of Child Trust Fund annual limit 4,080 4,080
Capital gains tax
Rate – basic rate tax payer – note 1 18% 10%
– higher rate tax payer – note 1 28% 20%
Annual exemptions – individuals (per year) 11,100 11,100
Certain trusts for disabled persons (per year) 11,100 11,100
Other trusts (per year) 5,550 5,550
Entrepreneurs Relief lifetime limit 10,000,000 10,000,000
Entrepreneurs Rate 10% 10%
Chattels exemption – up to 6,000 6,000
1 The 2016/17 reduction does not apply to residential property (where not covered by PPR relief)
Inheritance tax
Single persons nil rate band 1 – 325,000 1 – 325,000
Single persons 40% band over 325,000 over 325,000
Married couples or civil partnerships allowance nil rate band 650,000 650,000
Gifts to charities Exempt Exempt
Small gifts to same person 250 250
General gifts 3,000 3,000
Wedding gifts:
From: Parent 5,000 5,000
Grandparent/party 2,500 2,500
Other person 1,000 1,000
From 6 April 2012 a reduced rate of IHT of 36% will be introduced where 10% or more of the net estate is left to charity.
Business Property Relief
Business or interest in a business and transfer if unquoted shareholdings 100% 100%
Transfers out of a controlling shareholding in quoted companies, land and buildings, plant and machinery used in a qualifying company or partnership 50% 50%
Taxation of trusts
Accumulation or discretionary trusts:
Trust income up to £1,000 – dividend type income 10% Not confirmed
Trust income up to £1,000 – all other income 20% 20%
Trust income over £1,000 – dividend type income 37.5% Not confirmed
Trust income over £1,000 – all other income 45% 45%
Bare trusts:
Dividend type income 10% Not confirmed
All other income 20% 20%
Corporation tax
All profits and gains (excluding determination agreements and diverted profits) 20% 20%
Capital Allowances
Main writing down allowance (reducing balance) 18% 18%
Special rate writing down allowance (reducing balance) 8% 8%
First year allowances for certain energy-saving/water efficient products 100% 100%
Annual investment allowance 100% 100%
AIA level set permanently from 1 January 2016 at £200,000 pa
Research and Development Tax Credit Rates
SME Rate 230% 230%
Large company rate 130% 130%
Large companies expenditure credit scheme (LCEC) scheme 10% n/a
Research and development expenditure credit (RDEC) scheme n/a 11%
The RDEC scheme replaces the LCEC scheme from April 2016
Patent Box
Patent box 10% 10%
The Patent box regime will phased in from April 2013 with companies able to claim the benefit of
60% for 2013/14, 70% for 2014/15, 80% for 2015/16, 90% for 2016/17 and 100% from 2017/18 onwards
VAT
Standard rate 20% 20%
Reduced rate 5% 5%
Zero rate 0% 0%
Normal scheme registration threshold 82,000 83,000
Deregistration threshold 80,000 81,000
Cash accounting scheme -maximum to join 1,350,000 1,350,000
Cash accounting scheme – exit threshold 1,600,000 1,600,000
Annual accounting scheme – maximum to join 1,350,000 1,350,000
Annual accounting scheme – exit threshold 1,600,000 1,600,000
Flat rate scheme – maximum allowed to join 150,000 150,000
Flat rate scheme exit threshold 230,000 230,000
Annual Tax on Enveloped Dwellings (ATED)
More than £0.5m but not more than £1m n/a £3,500
More than £1m but not more than £2m £7,000 £7,000
More than £2m but not more than £5m £23,350 £23,350
More than £5m but not more than £10m £54,450 £54,450
More than £10m but not more than £20m £109,050 £109,050
More than £20m £218,200 £218,200

ACCA LEGAL NOTICE

This is a basic guide prepared by ACCA UK‘s Technical Advisory Service for members and their clients. It should not be used as a definitive guide, since individual circumstances may vary. Specific advice should be obtained, where necessary.

No comments yet.

Leave a Reply


© 2015 d2rCrossMedia. All Rights Reserved.