Tax Reports

Tax Rates 2017/18

Income Tax

Main allowances

Main allowances 2017/18 2016/17
Personal Allowance (PA)*† £11,500 £11,000
Blind Person’s Allowance 2,320 2,290
Rent a room relief ** 7,500 7,500
Trading income ** 1,000 N/A
Property income ** 1,000 N/A

*PA will be withdrawn at £1 for every £2 by which ‘adjusted income’ exceeds £100,000.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 £123,000 or more (2016/17: £122,000).

† 10% of the PA (2017/18: £1,150; 2016/17: £1,100) can be transferred to a spouse or civil partner who is no more than a basic rate taxpayer.

** If gross income exceeds this limit, the limit may be deducted instead of actual expenses.

Rate Bands 2017/18 2016/17
Basic rate band (BRB) £33,500 £32,000
Higher rate band (HRB) 33,501-150,000 32,001-150,000
Additional rate over 150,000 over 150,000
Scottish taxpayers
– BRB 31,500 32,000
– HRB 31,501-150,000 32,001-150,000
Personal Savings Allowance (PSA)
– Basic rate taxpayer 1,000 1,000
– Higher rate taxpayer 500 500
Dividend Nil Rate Band (DNRB) 5,000 5,000

BRB and additional rate threshold are increased by personal pension contributions (up to permitted limit) and Gift Aid donations.

Tax Rates 2017/18 and 2016/17
Rates differ for General, Savings and Dividend income G S D
Basic rate 20% 20% 7.5%
Higher rate 40% 40% 32.5%
Additional rate 45% 45% 38.1%

General income (salary, pensions, business profits, rent) usually 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 will tax interest at nil, where it would otherwise be taxable at 20% or 40%.

Dividends are normally taxed as the ‘top slice’ of income. The DNRB taxes the first £5,000 of dividend income at nil, rather than the rate that would otherwise apply.

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 2017/18 2016/17
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 60,000
17 of the preceding 20 tax years N/A 90,000





Tax Rates 2017/18

Tax Rates 2017/18
Summer Budget

Pensions

Registered Pensions

  2017/18 2016/17
Lifetime allowance (LA) £1m £1m
Annual allowance (AA)* 40,000 40,000

Annual relievable pension inputs are the higher of earnings (capped at AA) or £3,600.

*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. The AA can be reduced to £4,000, where certain pension drawings have been made.

State pension (per week)

  2017/18 2016/17
Old state pension – Single person £122.30 £119.30
Old state pension – Married couple 195.60 190.80
New state pension† 159.55 155.65

†applies to those reaching state retirement age after 5 April 2016.


Annual investment limits

  2017/18 2016/17
Individual Savings Account (ISA)
– Overall limit £20,000 £15,240
– Lifetime ISA 4,000 N/A
Junior ISA 4,128 4,080
EIS – 30% relief 1,000,000 1,000,000
EIS eligible for CGT deferral relief Unlimited Unlimited
Seed EIS (SEIS) – 50% relief 100,000 100,000
SEIS – 50% exemption for reinvested gains 100,000 100,000
Venture Capital Trust (VCT) – 30% relief 200,000 200,000