Income tax

 

Tax bands and rates 2016/17 2015/16
Basic rate band £32,000 £31,785
Basic tax rate 20% 20%
Dividend ordinary tax rate 7.5% 10%
Savings starting rate band £5,000* £5,000*
Savings starting rate - savings income 0% 10%
Higher rate band £32,001 - £150,000 £31,786 - £150,000
Higher tax rate 40% 40%
Dividend upper tax rate 32.5% 32.5%
Additional rate band over £150,000  £150,000
Additional tax rate 45% 45%
Dividend additional tax rate 38.1% 37.5%
Personal allowances Those born after 5 April 1948 £11,000 £10,600
  Those born after 5 April 1938 and before 6 April 1948 £11,000 £10,600
  Those born before 6 April 1938  £11,000 £10,660
Married couples/civil partners Transferable allowance £1,100 £1060
Blind person's allowance   £2,290 £2,290
Married couple's allowance (MCA) Maximum amount £8,355 £8,355
Tax reduction at 10% £835.50 £835.50
Applies after UK residence in 7 or
more of the previous 9 tax years
£30,000 £30,000
Applies after UK residence in at least 12 of the previous 14 years £60,000  £60,000 
Applies after UK residence in at least 17 of the last 20 years £90,000  £90,000 

Enterprise investment scheme (EIS) up to

£1,000,000 £1,000,000
Maximum amount for EIS carry back £50,000 £50,000
Income tax relief rate 30% 30%
Seed enterprise investment scheme (SEIS) £100,000 £100,000
Income tax relief  50%  50%
Venture capital trust (VCT) £200,000 £200,000
VCT tax relief rate 30% 30%
Golden handshake maximum tax free £30,000 £30,000
Rent a room - exempt on gross annual rent up to £7,500 £4,250
Construction industry scheme - deduction rate    
Standard rate - registered 20% 20%
Higher rate - not registered 30% 30%

*Savings income falling into the first £5,000 may be taxed at 0% for certain low income earners.

2017 and beyond

the personal allowance for 2017/18 will be £11,500. The basic rate limit is to be increased to £33,500 for 2017/18 and the higher rate threshold will increase to £45,000 in 2017/18.

Did you know?

The Treasury is expecting to raise £182.1 billion from income tax (2015/16 - £169.8 billion).

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