Income Tax Rates and Allowances
Income Tax Rates and Allowances (Table A)
| Main allowances | 2016/17 | 2015/16 |
|---|---|---|
| Personal Allowance*† | £11,000 | £10,600 |
| Blind Person's Allowance | 2,290 | 2,290 |
| Allowed only at 10% | ||
| Married Couple's Allowance (born before 6.4.35)** | 8,355 | 8,355 |
| Income limit for age-related allowances | 27,700 | 27,700 |
| Dividend and Savings Allowances | ||
| Dividend Tax Allowance (DTA) § | 5,000 | N/A |
| Personal Savings Allowance (basic rate taxpayer) § | 1,000 | N/A |
| Personal Savings Allowance (higher rate taxpayer) § | 500 | N/A |
*Personal Allowance (PA) will be withdrawn at £1 for every £2 by which 'adjusted income' exceeds £100,000. There will therefore be no allowance given if adjusted income is £122,000 or more (2015/16: £121,200).
†Up to 10% of the PA (2016/17: £1,100; 2015/16: £1,060) can be transferred to a spouse or civil partner who is no more than a basic rate taxpayer.
**Married Couple's Allowance is reduced by £1 for every £2 by which adjusted income exceeds the income limit, down to a minimum of £3,220.
§The DTA taxes the first £5,000 of dividend income at nil rather than the rate that would otherwise apply – see rates below. The Personal Savings Allowance (PSA) operates as a nil rate band for interest income.
| Rate bands | 2016/17 | 2015/16 |
|---|---|---|
| Basic | £32,000 | £31,786 |
| Higher | 32,001-150,000 | 31,786-150,000 |
| Additional | over 150,000 | over 150,000 |
| Rates | 2016/17 | 2015/16 | ||||
|---|---|---|---|---|---|---|
| Rates differ for General, Savings and Dividend income within each band: | ||||||
| G | S | D | G | S | D | |
| Basic | 20% | 20% | 7.5% | 20% | 20% | 10% |
| Higher | 40% | 40% | 32.5% | 40% | 40% | 32.5% |
| Additional | 45% | 45% | 38.1% | 45% | 45% | 37.5% |
General income (salary, pensions, business profits, rent) uses Personal Allowance, basic rate and higher rate bands before savings income (interest). To the extent that savings income falls in the first £5,000 of the basic rate band, it is taxed at nil rather than 20%. The PSA (see above) will tax interest at nil where it would otherwise be taxable at 20% or 40%.
Dividends are taxed as the 'top slice' of income. For 2016/17, the dividend received is taxable. In 2015/16, the dividend received was grossed up by 100/90 to determine the taxable dividend. A non-repayable tax credit equal to 10% of the taxable amount was then deductible against the income tax liability on the taxable dividend.
High Income Child Benefit Charge (HICBC)
1% of child benefit for each £100 of adjusted net income between £50,000 and £60,000.
| Remittance basis charge | 2016/17 | 2015/16 |
|---|---|---|
| For non-UK domiciled individuals who have been UK resident in at least |
||
| 7 of the preceding 9 tax years | £30,000 | £30,000 |
| 12 of the preceding 14 tax years | 60,000 | 50,000 |
| 17 of the preceding 20 tax years | 90,000 | N/A |
Registered Pensions (Table B)
| 2016/17 | 2015/16 | |
|---|---|---|
| Lifetime allowance (LA) | £1.00m | £1.25m |
| Annual allowance (AA)* | 40,000 | 40,000 |
| LA charge if excess drawn as | cash 55%/income 25% | |
| AA charge on excess inputs | 20%-45% | |
Annual relievable pension inputs are the higher of earnings (capped at AA) or £3,600.
*For 2016/17 the AA is usually reduced by £1 for every £2 by which relevant income exceeds £150,000, down to a minimum AA of £10,000.
Car and Fuel Benefits (Table C)
Cars
Taxable benefit is chargeable value multiplied by chargeable percentage.
Chargeable value:
Initial list price of car (including most accessories), reduced by any capital contribution (maximum £5,000) by employee when the car is first made available.Chargeable percentage:
| CO2 emissions (g/km) | Petrol | Diesel |
|---|---|---|
| 0-50 | 7% | 10% |
| 51-75 | 11% | 14% |
| 76-94 | 15% | 18% |
| Above 94 | Add 1% for every 5g/km | |
| Above 200 (petrol)/ 185 (diesel) | 37% maximum | |
Car Fuel
Where employer provides fuel for private motoring in an employer-owned car, CO2-based percentage from above table multiplied by £22,200 (2015/16 £22,100).
Employee contributions for fuel do not reduce taxable figure unless all private fuel is paid for by the employee (in which case there is no benefit charge).