Email: info@taxreturn.co.uk



Please find below details of the new tax rates and allowances

which are applicable for the year commencing April, 2016.


Please do not hesitate to contact us if you would like further information

or you wish to discuss any of the tax rates or allowances in more detail.


                                 

Income Tax

Income tax rates 1 2016/17 2015/16
  Starting rate limit (savings income) 2 *£5,000 *£5,000
  Starting rate 2 *0% *0%
Basic rate band - income up to £32,000 £31,785
  Basic rate 20% 20%
  Dividend ordinary rate, otherwise taxable at basic rate ***7.5% 10% (0%**)
Higher rate - income over £32,000 £31,785
  Higher rate 40% 40%
  Dividend upper rate, otherwise taxable at higher rate ***32.5% 32.5% (25%**)
Additional rate - income over £150,000 £150,000
  Additional rate 45% 45%
  Dividend additional rate, otherwise taxable at additional rate ***38.1% 37.5%
(30.6%**)

For 2016/17 Scottish taxpayers are effectively subject to the same income tax rates as the rest of the UK.

* If an individual's taxable non-savings income exceeds the starting rate limit, then the starting rate will not be available for savings income

For 2016/17, £1,000 of savings income for basic rate taxpayers (£500 for higher rate) may be tax-free.

** Effective rate with tax credit

*** For 2016/17 the first £5,000 of dividends are tax-free

Personal allowance (PA)    
Born after 5 April 1938 3 £11,000 £10,600
Born before 6 April 1938 4 £11,000 £10,660
Income limit for PA 3 £100,000 £100,000
Income limit for PA (Born before 6 April 1938) 4 £27,700 £27,700
Blind person's allowance   £2,290 £2,290
Married couple's allowance (MCA)    
Either partner born before 6 April 1935 (relief restricted to 10%) 5 £8,355 £8,355
Transferable tax allowance ('Marriage Allowance')    
For certain married couples and civil partners born after 5 April 1935 (relief 20%) 6 £1,100 £1,060
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
Golden Handshake max. £30,000 £30,000

Notes

  1. From 2016/17 onwards, all individuals will be entitled to the same personal allowance, regardless of the individuals date of birth.
  2. If an individuals taxable non-savings income exceeds the starting rate limit, then the starting rate for savings will not be available for savings income.
  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 individuals date of birth.
  4. Personal allowances for those born before 5 April 1938 are reduced by £1 for each £2 of excess income over £27,700 until the basic allowance is reached.
  5. Similar limits apply to the married couple's allowance. The reduction in allowance is subject to a minimum level of £3,220. (For couples married before 5 December 2005, only the husbands income is taken into account. For those married on or after 5 December 2005 or in a civil partnership, only the higher earners income is taken into account).
  6. Available to spouses/civil partners born after 5 April 1935. The allowance is 10% of the personal allowance for those born after 5 April 1938. 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. The recipient is eligible to a tax reduction at 20% of the transferred amount.

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