TAX RATES

2015/2016

2016/2017

Basic rate @ 20%

0 - £31,785

0 - £32,000

Higher rate @ 40%

£31,786 - £150,000

£32,001 - £150,000

Additional rate 45%

Over £150,000

Over £150,000

Savings income rate @ 10% / 0%

£5,000*

£5,000*

* If taxable non-savings income is above this limit, then the 10% savings rate is not due.

 

PERSONAL ALLOWANCES

2015/2016 (£)

2016/2017 (£)

Born after/to

Personal Allowance

10,600

11,000

* after 05/04/48

Age Allowance (75 or over)

10,660

   

- Personal

10,660

 

* before 06/04/38

- Married (10% relief)

8,355

8,355

* before 06/04/35

Income limit for age allowances

27,700

27,700

* before 06/04/48

Married couples

     

Minimum allowance (over 65)

3,220

3,220

 

Blind persons allowance

2,290

2,290

 

Marriage allowance (transferable & available @ 20%)

1,060

1,100

after 1935

Dividend allowance

 

5,000

 

Personal savings allowance

     
Basic rate tax payer   1,000  
Higher rate taxpayer   500  

The standard personal allowance reduces where the income is above £100,000, by £1 for every £2 of income above the £100,000 limit. This reduction applies irrespective of age. Where income exceeds the £100,000 limit, the age allowance could be reduced below the basic personal allowance.

Tax free income for the Rent-a-room scheme increases from £4,250 for 2015/2016 to £7,500 for 2016/17.


COMPANY CAR BENEFITS

For 2016/2017, there is a 7% rate for vehicles up to 50gm/km and then a 11% minimum charge of list price for ratings up to 75gm/km ). From 76 - 94gm/km, the rate is 15% and rises by 1% for every 5gm/km to the current maximum of 37%. For diesels, add 3%, if solely diesel, up to a maximum of 37% . The charge is capped at 37% of the car’s list price (including extras) and payable at the relevant marginal rate of tax. Fuel benefits are calculated in a similar way using a base vehicle value of £22,200 (2015/2016 - £21,100). For unrestricted use, the benefit on vans is £3,170 (2015/2016 - £3,150), plus £598 (2015/2016 - £594), if private petrol is supplied. The benefit on electric vans is £1,268 (2015/2016 - £630) The benefit assessed is zero, if private use is restricted to home garaging only.

 

CONSTRUCTION INDUSTRY TAX DEDUCTION SCHEME

The tax deduction rate for subcontractors remains at 20% for 2016/2017. Contractors (& PAYE/NIC) can pay quarterly if monthly liabilities are under £1,500. CIS subcontractor companies can offset CIS tax deducted from income against monthly PAYE/NIC costs

 

PENSION ARRANGEMENTS

The contribution limit, with no salary, is £3,600. Up to a salary of £40,000 (2015/2016 -£40,000), 100% can be contributed. The lifetime allowance is £1,000,000 (2015/2016 -£1,250,000). Relief for company contributions may have to be spread over four years if they exceed (broadly) 210% of the previous year’s contributions. The minimum pension age remains 55.

 

CAPITAL GAINS TAX

The 2016/2017 annual exemption for individuals & disabled persons will be £11,100 (2015/2016 - £11,100) and £5,550 (2015/2016- £5,550) for other trusts. Above these exemptions the flat rate of tax is 10% (18% - 2015/2016. If the higher rate tax threshold is exceeded, the rate is 20% (2015/16 – 28%). CGT on trusts is charged at a flat rate of 28%. The reduced rates for 2016/2017 do not apply to gains on the sale of taxable residential property.

 

INHERITANCE TAX

The death rate remains at 40%. The lifetime rate for transfers in & out of certain trusts remains at ½ death rate. The single person’s threshold remains at £325,000 and for married couples (and widows & widowers) remains at £650,000.

 

CORPORATION TAX

 

1.4.2015 to 31.3.2016

&

1.4.2016 to 31.3.2017

Main Rate

20%

 

20%

The main rate will fall to 19% from 01/04/2017 and from 01/04/2020 will be reduced to 17%.

 

BUSINESS GIFTS/STAFF EVENTS EXEMPTION

The de minimis limit for expenditure on business gifts is £50 per donee per tax year. Gifts under £50 may be given away VAT free. The annual staff events exemption is £150 per person per annum.

 

APPROVED MILEAGE RATES

From, 06/04/12, the mileage rates are 45p for the first 10,000 miles and 25p thereafter. 2p per mile for VAT can be recovered on the vehicle rates (3p for petrol vehicles over 2000cc). Fuel receipts need to be attached to these claims. Motorcycles claim at 24p per mile and bicycles at 20p per mile. Also, 5p per mile can be claimed for each employee who travels as a passenger on a business journey

 

BENEFITS

Employers’ class 1A NIC covers all benefits which are already taxed (except for workplace nurseries etc). The rate is 13.8% for 2016/2017 (2015/2016 – 13.8%).

 

CAPITAL ALLOWANCES

The annual investment allowance relief will be £200,000 per annum indefinitely from 01/01/2016. For 2016/2017, writing down allowances generally are 18% and for the special rate pool are 8%. Low emission cars (below 75g/km) will qualify for 100% allowances. Vehicles with 76-130g/km qualify for 18% annual allowance and with 130g/km and over, qualify for 8% annual allowance. 100% initial capital allowances are available to renovate/convert vacant residential space above offices & shops. Business premises renovation initial allowances are also 100%. Pool balances below £1,000 can be written off.

 

RESEARCH & DEVELOPMENT

R&D expenditure for SME companies obtain relief at 230%. Companies not yet in profit and also before trading starts can take the relief up front in cash. The amount of R &D tax credit that can be taken in cash will be 14.5% from 01/04/2014. R&D tax credits are also available to companies before trading starts. Large companies will have to convert to the ATL credit scheme at 11% on 01/04/16.

 

TAX EFFICIENT INVESTMENTS

EIS annual investment limit is £1,000,000 at 30% income tax relief. The VCT relief is £200,000 at 30% and the Seed EIS limit is £100,000 at 50% income tax relief limit. All these schemes are CGT exempt.

 

ENTREPRENEURS' RELIEF

This relief, which has to be claimed, gives a CGT rate of 10% for eligible lifetime gains. Various conditions apply. The conditions must have been satisfied for at least a year before disposal (& over 5% shareholding). Entrepreneurs’ relief is on lifetime gains up to £10 million (as for 2015/2016).

 

VALUE ADDED TAX

From 1/4/2016, the annual registration limit is £83,000 (previously £82,000). The de-registration limit is raised from £80,000 to £81,000.

  1. The threshold for providing monthly EC sales list returns is £35,000 in the current of four previous
    quarters .
  2. The annual accounting and cash accounting schemes limits are £1,350,000. The flat rate system is available for businesses with turnover up to £150,000 (excluding VAT). Various rates apply, so each business should assess whether the flat rate scheme is beneficial to them.
  3. The VAT standard rate is 20% and the reduced rate is 5%.( Inclusive amounts -1/6 and 1/21)

 

NIC CONTRIBUTIONS

Class 1 (earnings related)

2015/2016

 

2016/2017

Lower earnings limit

£112

 

£112

Primary threshold (LEL) (per week)

£155

 

£155

Upper earnings limit (UEL) (per week-employees only)

£815

 

£827

Secondary threshold (per week-employers)

£156

 

£156

Employees £155.01 to £815 per week

12%

 

12%

£815 & over

2%

 

2%

Rate: Employees £155.01 to £815 pw

12%

 

12%

Rate: Employees £815 & over

2%

 

2%

Rate: Employer No NIC on salary up to £156 / week

£156

 

£156

Rate: Employer On £153/£156 pw & over

 

13.8%

 

For 2016/2017, there is an NIC employment allowance reclaim of £3,000 per annum (2015/2016 - £2,000)

Class 2 (self-employed flat rate) Per week

£2.80

 

£2.80

Small earnings exception (per year)

£5,965

 

£5,965

Class 3 (voluntary) Per week

£14.10

 

£14.10

Class 4 (self-employed) - Rate

 

9.0%

 

Lower profits limit (per year)

£8,060

 

£8,060

Upper profits limit (per year)

£42,380

 

£43,000

Above £41,865 / £42,385 per year

 

2%

 

The above is not exhaustive and please refer for further details to 0118 9787561 or email: This email address is being protected from spambots. You need JavaScript enabled to view it.

© 2013 Alan Reynolds & Company Limited.