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Tax Rates & Allowances

Many of the tax rates and allowances are fundamental to our business and personal lives and the main ones are summarised here. We are sure that you will find it a useful point of reference throughout the coming tax year but if you have any questions please contact us.


Income Tax Rates

2017/18

2016/17

Band £ Rate % Band £ Rate %
0 - 5,000 0 0 - 5,000 10
0 - 33,500 20* 0 - 32,000 20*
33,501 - 150,000 40** 32,001 - 150,000 40**
Over 150,000 45*** Over 150,000 45***


* Except dividends (7.5%).
** Except dividends (32.5%).
*** Except dividends (38.1%).
Other income taxed first, then savings income and finally dividends.

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Income Tax Reliefs

 

2017/18
£

2016/17
£

Personal allowance 11,500 11,000
Marriage allowance 1,150 1,100
Blind Persons 2,320 2,290
Married couple's allowance
(Either partner born before 6 April 1935)
 - Maximum reduction in tax bill 844.50 835.00
 - Minimum reduction in tax bill 326.00 322.00
Married couple's allowance income limit
(Reduce married couple's allowance by £1 for every £2 of 'adjusted net income' above this limit)
28,000 27,700

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Pension Premiums

2017/18

  • Tax relief available for personal contributions is the higher of £3,600 (gross) or 100% of relevant earnings.
  • Any contributions in excess of £40,000, whether personal or by the employer, may be subject to income tax on the individual.
  • The limit may be reduced to £10,000 (reducing to £4,000 from 6 April 2017) once money purchase pensions are accessed.
  • Where the £40,000 (previously £50,000 for tax years to 2013/14) limit is not fully used it may be possible to carry the unused amount forward for three years.
  • The annual allowance is tapered for those with adjusted income over £150,000. For every £2 of income over £150,000 an individual's annual allowance will be reduced by £1, down to a minimum of £10,000.
  • Employers will obtain tax relief on employer contributions if they are paid and made 'wholly and exclusively' for the purposes of the business. The tax relief for large contributions may be spread over several years.

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Car, Van and Fuel Benefits

CO2 emissions (gm/km) (round down to nearest 5gm/km)

% of car’s list price taxed

0 - 50 9
51 up to 75 13
76 up to 94 17
95 18
100 19
105 20
110 21
115 22
120 23
125 24
130 25
135 26
140 27
145 28
150 29
155 30
160 31
165 32
170 33
175 34
180 35
185 36
190 and above 37
  • The car benefit is calculated by multiplying the car's list price, when new, by a percentage linked to the car's CO2 emissions.
  • For diesel cars add a 3% supplement but the maximum is 37%.
  • The list price includes accessories.
  • The list price is reduced for capital contributions made by the employee up to £5,000.
  • Special rules may apply to cars provided for disabled employees.
  • For cars registered before 1 January 1998 and cars with no agreed CO2 emissions the charge is based on engine size.

Car fuel benefit

  • Car fuel benefit applies if an employee has the benefit of private fuel for a company car.
  • The benefit is calculated by applying the percentage used to calculate the car benefit by a 'fuel charge multiplier'.
  • The charge is proportionately reduced if provision of private fuel ceases part way through the year. The fuel benefit is reduced to nil only if the employee pays for all private fuel.
 

2017/18
£

2016/17
£

Fuel charge multiplier 22,600 22,200

Van benefit per vehicle

  • Van benefit is chargeable if the van is available for an employee's private use.
  • A fuel benefit may also be chargeable if an employee has the benefit of private fuel paid for in respect of a company van.
  • The charges do not apply to vans if a 'restricted private use condition' is met throughout the year.
  • A reduced benefit charge may apply to vans which cannot emit CO2 when driven.
 

2017/18
£

2016/17
£

Van Benefit 3,230 3,170
Fuel Benefit 610 598

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Mileage Allowance Payments

  • MAPs represent the maximum tax free mileage allowances an employee can receive from their employer for using their own vehicle for business journeys.
  • An employer is allowed to pay an employee a certain amount of MAPs each year without having to report payments to HMRC.
  • If the employee receives less than the statutory rate, tax relief can be claimed on the difference.

Cars and vans

2017/18 and 2016/17
Rate per mile

Up to 10,000 miles 45p
Over 10,000 miles 25p
Bicycles 20p
Motorcycles 24p

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Individual Savings Accounts (ISAs)

ISA Limits

2017/18
£

2016/17
£

Overall annual investment limit 20,000 15,240
Junior ISA annual investment limit 4,128 4,080
Help to Buy ISA monthly subscription limit (initial deposit limit £1,000) 200 200
Lifetime ISA annual investment limit 4,000  

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Corporation Tax

  • Corporation tax rates are set for each Financial Year. A Financial Year runs from 1 April to the following 31 March.
  • If the accounting period of a company straddles the 31 March, the profits are apportioned on a time basis to each Financial Year.
  • The Northern Ireland Executive has committed to setting the rate of corporation tax at 12.5% in April 2018 if the Northern Ireland Executive demonstrates its finances are on a sustainable footing.*

* 2017/18

 

Year to 31.3.18

Year to 31.3.17

  Rate
%
Rate
%
All Profits 19 20

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Capital Allowances

  • The cost of purchasing capital equipment in a business is not a revenue tax deductible expense. However tax relief is available on certain capital expenditure in the form of capital allowances.
  • Plant and machinery allowances may be available on items such as machines, equipment, furniture, certain fixtures in a building ('integral features'), computers, cars, vans and similar equipment used in a business. 
  • There are special rules for cars and certain 'environmentally friendly' equipment.
  • Plant and machinery allowances may be available to owners of commercial property which is let out to a business.
  • The Annual Investment Allowance (AIA) gives a 100% write-off on most types of plant and machinery (but not cars) up to an annual limit.
  • Writing down allowances (WDA) are given for expenditure for which AIA is not, or cannot be, claimed.

Annual Investment Allowance (AIA)

  • Special rules apply to accounting periods straddling the dates in the tables below.
  • The AIA may need to be shared between certain businesses under common ownership.

AIA limits - companies

Expenditure incurred

Annual limit
£

1 April 2014 to 31 December 2015 500,000
From 1 January 2016 200,000

AIA limits - sole traders and partnerships

Expenditure incurred

Annual limit
£

6 April 2014 to 31 December 2015 500,000
From 1 January 2016 200,000

Other plant and machinery allowances

  • Expenditure upon which AIA is not given/claimed will obtain relief through the 'main rate pool' or the 'special rate pool' rather than each item being dealt with separately.
  • The annual rate of WDA is 18% in the 'main rate pool' and 8% in the 'special rate pool'.
  • A 100% first year allowance (FYA) may be available on certain energy efficient plant and cars.

Cars

  • For expenditure incurred on cars, costs are generally allocated to one of the two plant and machinery pools.
  • AIA is not available on any car but a 100% first year allowance may be available on certain cars. To qualify for first year allowance, the car must be purchased new.
  • The government has announced that for expenditure incurred on cars on or after 1 April 2018 the emissions limits for the main rate and FYA are reduced to 110 and 50 g/km respectively.

Cars acquired from April 2015

Emissions (g/km)

Pool

Allowance

≤75 Main rate 100% FYA
≤ 130 Main rate 18% WDA
>130 Special rate 8% WDA

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Value Added Tax

Standard rate 20%
Reduced rate 5%
Annual Registration Limit - from 1.4.17 - 31.3.18 £85,000
Annual Deregistration Limit - from 1.4.17 - 31.3.18 £83,000

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Capital Gains Tax

 

2017/18

2016/17

Individuals £ £
Exemption 11,300 11,100
Standard rate 10%** 10%**
Higher rate* 20%** 20%**
Trusts    
Exemption 5,650 5,550
Rate 20% 20%

* For higher rate and additional rate tax payers.

** Higher rates of 18% and 28% may apply to the disposal of certain residential property.

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Inheritance Tax

  • IHT may be payable when an individual's estate is worth more than the IHT nil rate band when they die.
  • Lifetime and death transfers between UK domiciled spouses are exempt from IHT.
  • For 2017/18, a further nil rate band of £100,000 may be available in relation to current or former residences.
  • The IHT threshold available on death may be increased for surviving spouses as there may have been a nil rate band not used, or not fully used, on the previous death.
  • There are reliefs for some assets which reduce their value for IHT purposes.
  • IHT may also be payable on gifts made in an individual's lifetime but within seven years of death.
  • Some lifetime gifts are exempt.
  • Transfers of assets into trust made in an individual's lifetime may be subject to an immediate charge but at lifetime rates.
  • There are also charges on some trusts.

IHT rates and nil rate band 2017/18 and 2016/17

IHT nil rate £325,000
Lifetime rate 20%
Death rate 40%
Death rate if sufficient charitable legacies made 36%

IHT reliefs for lifetime gifts

Annual exemption £3,000
Small gifts £250
Marriage  
- parent £5,000
- grandparent £2,500
- bride/groom £2,500
- other £1,000

IHT - reduced charge on gifts within seven years of death

Years before death

% of death charge

0 - 3 100
3 - 4 80
4 - 5 60
5 - 6 40
6 - 7 20

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Stamp Duty & Stamp Duty Land Tax

Stamp Duty

When you buy shares, you usually pay a tax or duty of 0.5% on the transaction. If you buy shares electronically Stamp Duty Reserve Tax (SDRT) is payable. For shares purchased using a stock transfer form, you will pay Stamp Duty if the transaction is over £1,000.

Stamp Duty Land Tax (SDLT)

  • SDLT is payable on land and property transactions in England, Wales and Northern Ireland.
  • Property transactions in Scotland are subject to Land and Buildings Transaction Tax.
  • From April 2018, Land Transaction Tax (LTT) will replace SDLT in Wales.

Residential Property

The rates apply to the portion of the total value which falls within each band.

Consideration
£

Rate

0 - 125,000 0%
125,001 - 250,000 2%
250,001 - 925,000 5%
925,001 - 1,500,000 10%
1,500,001 and above 12%

From April 2016 these rates may be increased by 3% where further residential properties, costing over £40,000, are acquired.

Non-residential SDLT rates

Consideration
£

Rate

0 - 150,000 0%
150,001 - 250,000 2%
Over 250,000 5%

Payable on consideration which falls in each band.

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National Insurance

  • Employees start paying Class 1 NIC from age 16 (if sufficient earnings).
  • Employers pay Class 1 NIC in accordance with the table below.
  • Employer NIC for employees under the age of 21 and apprentices under the age of 25 is reduced from the normal rate of 13.8% to 0% up to the Upper Secondary Threshold.
  • Employees' Class 1 NIC stop when they reach their State Pension age. The employer's contribution continues.

Employees - Class 1

Earnings per week
2017/18

Earnings per week
2016/17

%

Up to £157 Up to £155 Nil* **
£157.01 - £866 £155.01 - £827 12
Over £866 Over £827 2

* 2017/18 - Entitlement to state pension and other contribution-based benefits is retained for earnings between £113 and £157 per week.

** 2016/17 - Entitlement to state pension and other contribution-based benefits is retained for earnings between £112 and £155 per week.

Employers - Class 1

Earnings per week
2017/18

Earnings per week
2016/17

%

Up to £157 Up to £156 Nil* **
Over £157 Over £156 13.8
Upper Secondary Threshold (for under 21s and apprentices under 25) Up to £866 Upper Secondary Threshold (for under 21s and apprentices under 25) Up to £827 0%

Other National Insurance payable by employers

Class 1A - 13.8% on broadly all taxable benefits provided to employees

Class 1B - 13.8% on PAYE Settlement Agreements

Self-employed - Class 2 and 4

  • A self-employed person starts paying Class 2 and Class 4 NIC from 16 or over (if sufficient profits)
  • Class 2 NIC stop when a person reaches State Pension age
  • Class 4 NIC stop from the start of the tax year after the one in which the person reaches State Pension age.

Self-employed - Class 2

 

2017/18

2016/17

Flat rate per week £2.85 £2.80
Small Profits Threshold* £6,025 per year £5,965 per year

* No Class 2 is due if the amount of trading profits assessable to income tax and Class 4 NIC is below this figure. However, a person might decide to carry on paying class 2 voluntarily to accrue entitlement to the State Pension and entitlement to other benefits.

Class 4

Annual Profits
2017/18

Annual Profits
2016/17

%

Up to £8,164 Up to £8,060 Nil* **
£8,164.01 - £45,000 £8,060.01 - £43,000 9
Over 45,000 Over 43,000 2

Class 3

  • A person needs 35 years (30 years if State Pension age is before 6 April 2016) of NIC to get a full State Pension.
  • Class 3 voluntary contributions can be paid to fill or avoid gaps in a NI record.

Class 3 - 2017/18

Flat rate per week £14.25

Class 3 - 2016/17 and 2015/16

Flat rate per week £14.10

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Self Assessment: Key Dates 2014/15

31 January 2017 - First payment on account due for 2016/17 tax year.

31 July 2017 - Second payment on account for 2016/17 tax year.

5 October 2017 - Deadline for notifying HMRC of new sources of income (including the Child Benefit charge) if no tax return has been issued for 2016/17 tax year.

31 October 2017 - Deadline for submission of 2016/17 non-electronic returns.

30 December 2017 - Deadline for submission of 2016/17 electronic tax returns if 'coding out' of any underpayment is required.

31 January 2018 - Deadline for filing electronic tax returns for 2016/17. Balancing payment due for 2016/17 tax year. First payment on account due for 2017/18 tax year.

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