Institute of Chartered Accountants England and Wales

Tax rates

Please use the menu below to view the current tax rates.  If you have any questions, you can call on 01234 888703 or send us a message here.

Income Tax

Allowances 2017/18 2016/17
Personal Allowance (PA) *† £11,850 £11,500
Blind Person's Allowance £2,390 £2,320
Rent a room relief** £7,500 £7,500
Trading Income** £1,000 £1,000
Property Income** £1,000 £1,000

* PA will be withdrawn at £1 for every £2 by which 'adjusted income' exceeds £100,000.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 £123,700 or more (2017/18: £123,000).

†10% of the PA (2018/19: £1,185; 2017/18: £1,150) can be transferred to a spouse of civil partner who is no more than a basic rate taxpayer.

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

Rate Bands 2018/19 2017/18
Basic Rate Band (BRB) £34,500 £33,500
Higher Rate Band (HRB) 34,501-150,000 33,501-150,000
Additional rate over £150,000 over £150,000
Personal Savings Allowance (PSA)    
- Basic rate taxpayer £1,000 £1,000
- Higher rate taxpayer £500 £500
Dividend Allowance (DA) £2,000 £5,000

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

Scottish taxpayers
The 2018/19 tax rates and bands for Scottish taxpayers have not been announced.  For 2017/18, the basic rate band is £31,500.

Tax rates 2018/19 & 2017/18
Rates differ for General/Savings/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 profit, rent) usually uses personal allowance, basic 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 taxes 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 normally 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 2018/19 2017/18
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
15 of the preceding 20 tax years Deemed to be UK domiciled.

Pensions

Registered Pensions 2018/19 2017/18
Lifetime allowance (LA) £1,030,000 £1,000,000
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) 2018/19 2017/18
Old state pension - Single person £125.95 £122.30
Old state pension - Married couple £201.45 £195.60
New state pension § £164.35 £159.55

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

Annual Investment Limits

  2018/19 2017/18
Individual Savings Account (ISA)    
- Overall limit £20,000 £20,000
- Lifetime ISA £4,000 £4,000
Junior ISA £4,260 £4,128
EIS - 30% relief £2,000,000 £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

* For 2018/19, amount over £1m must be invested in 'knowledge-intensive' companies.

National Insurance Contributions

Class 1 (employees) Employee Employer
Main NIC rate 12.0% 13.8%
No NIC on first £162pw £162pw
Main rate* charged up to £892pw no limit
2% rate on earnings above £892pw N/A
Employment allowance per business** N/A £3,000

* Nil rate of employer NIC for employees under the age of 21 and apprentices under 25, up to £892pw.

** Some businesses do not qualify, including some sole director companies.

Employer contributions (at 13.8%) are also due on most taxable benefits (Class 1A) and on tax paid on an employee's behalf under a PAYE settlement agreement (Class 1B).

Class 2 (Self-employed)

Flat rate per week £2.95
Small profits threshold £6,205

Class 3 (Voluntary)

Class 3: Flat rate per week £14.65
Class 3A: Contributions vary with age  

Class 4 (Self-employed)

On profits £8,164 to £45,000 9.0%
On profits over £45,000 2.0%

Vehicle benefits

Cars

Taxable benefit: Chargable value multiplied by chargeable %.

Chargeable value: Initial list price of car (including most accessories), reduced by any capital contribution (maximum £5,000) by employee when car is first made available.

Chargeable percentage:

Co2 emmisions g/km Petrol Diesel
0-50 13% 17%
51-75 16% 20%
76-94 19% 23%
Above 94 Add 1% for every 5g/km
Above 179 (petrol)/159 diesel 37% maximum

Vans
Chargeable value of £3,350 (2017/18 £3,230) if private use is more than home-to-work. Electric vans £670 (2017/18 £646).

Fuel
Employer provides fuel for private motoring in an employer-owned:
Car: CO2-based percentage from above table multiplied by £23,400 (2017/18 £22,600).
Van: £633 (2017/18 £610).

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).

Tax Free Mileage Allowances

Employee's own transport per business mile
Cars first 10,000 miles 45p
Cars over 10,000 miles 25p
Business Passengers 5p
Motorcycles 24p
Bicycles 20p

Capital Gains Tax

Annual exemption 2018/19 2017/18
Individuals, estates £11,700 £11,300
Most trusts 5,850 5,650

Tax rate

Individual (to basic rate limit)* 10% 10%
Individual (above basic rate limit)* 20% 20%
Entrepeneurs' Relief (ER)** 10% 10%
Trusts, estates* 20% 20%

* Individuals are taxed at 18%/28% on gains on residential property and receipts of carried interest. Trusts are taxed at 28% in these circumstances.

** ER is available for lifetime gains of up to £10m. Qualifying disposals include a trading business, shares in a trading company (from a minimum 5% holding) by an officer/employee or certain holdings by external investors. Various conditions apply.

Shares in an unquoted trading company may be eligible for a 10% CGT rate on lifetime gains up to £10m, if disposed of after 5 April 2019 by someone who is neither a paid officer njor employee of the company (Investors' Relief).

Corporation Tax

Year to 31/03/2019 31/03/2018
Corporation tax rate 19% 19%
Research and development relief From 01/01/2018 From 31/12/2017
SME enhanced expenditure deduction scheme* 130% 130%
Large company R&D expenditure credit (RDEC) scheme** 12% 11%

* Additional deduction for qualifying R&D.

** Taxable expenditure credit for qualifying R&D.

SMEs that make losses can surrender the deduction to HMRC in exchange for a payment of 14.5% of the loss.

Main capital allowances

Plant and machinery  
100% Annual Investment Allowance (AIA) £200,000

Other rates

- energy and water-efficient equipment 100%
- writing down allowance: general pool (reducing balance) 18%
- writing down allowance: special rate pool (reducing balance) 8%

The special rate pool includes long life assets, integral plant in buildings, thermal insulation.

Motor cars

  From 1.4.18
CO2 (g/km)
To 31.3.18
CO2 (g/km)
Allowance
New cars only Up to 50 Up to 75 100%
In general pool Up to 110 Up to 130 18% pa
In special rate pool Above 110 Above 130 8% pa

Property taxes

Annual Tax on Enveloped Dwellings (ATED)

ATED applies to 'high value' residential properties owned via a corporate structure, unless the property is used for a qualifying purpose.  The tax applies to properties valued at more than £500,000.

Property value Annual charge to
  31.3.2019 31.3.2018
£0.5m - £1m £3,600 £3,500
£1m - £2m £7,250 £7,050
£2m - £5m £24,250 £23,550
£5m - £10m £56,550 £54,950
£10m - £20m £113,400 £110,100
£20m + £226,950 £220,350

Stamp Duty Land Tax (SDLT) and
Land and Buildings Transaction Tax (LBTT)

Residential property (1st property only)

SDLT - England & NI
£000 Rate on band
Up to 125 Nil
125 - 250 2%
250 - 925 5%
925 - 1,500 10%
Over 1,500 12%
LBTT - Scotland
£000 Rate on band
Up to 145 Nil
145 - 250 2%
250 - 325 5%
325 - 750 10%
Over 750 12%
LTT - Wales
£000 Rate on band
Up to 150 Nil
150 - 250 2.5%
250 - 400 5.0%
400 - 750 7.5%
750 - 1,500 10.0%
Over 1,500 12%

LTT replaces SDLT in Wales from 1 April 2018.

A supplement of 3% of the total purchase price applies for all three taxes where an additional residential property is purchased for more than £40,000 (unless replacing a main residence.

For SDLT:
- From 22.11.17, first-time buyers purchasing a property of up to £500,000 pay a nil rate on the first £300,000 of purchase price.

* A rate of 15% applies to the total purchase price where the property is valued above £500,000 and purchased by a 'non-natural person' (e.g. a company).

Non residential or mixed use property

SDLT - England & NI
£000 Rate on band
Up to 150 Nil
150 - 250 2%
Over 250 5%
LBTT - Scotland
£000 Rate on band
Up to 150 Nil
150 - 350 3.0%
Over 350 4.5%
LTT - Wales
£000 Rate on band
Up to 150 Nil
150 - 250 1%
250 - 1000 5%
Over 1,000 6%

LBTT rates may change after the Scottish budget in December 2017.

Value added tax

Standard rate (1/6 of VAT-inclusive price) 20%
Registration level from 1.4.2017 £85,000 per annum
Deregistration level from 1.4.2017 £83,000 per annum

Flat rate scheme (FRS)

Annual taxable turnover to enter scheme Up to £150,000
Must leave scheme if annual taxable turnover Exceeds £230,000

If using FRS, the VAT paid by the business is a fixed percentage (based on business category) of "FRS Turnover" rather than the net of output tax over input tax. Input tax is usually not recoverable.

Cash accounting and annual accounting schemes

Annual taxable turnover to enter scheme Up to £1.35m
Must leave scheme if annual taxable turnover Exceeds £1.60m

Option to tax property
Notify HMRC within 30 days.

Inheritance Tax

  2018/19 2017/18
Nil rate band (NRB)* £325,000 £325,000
NRB Residential Enhancement (RNRB) †* £125,000 £100,00
Rate of tax above nil rate band** 40% 40%
Lifetime transfers to most trusts 20% 20%

† RNRB is available for transfers of a main residence to direct descendents. It tapers away at the rate of £1 for every £2 of estate value above £2m.

* Up to 100% of the proportion of a deceased spouse's/civil partner's unused NRB and RNRB band may be claimed to increment the current NRB and RNRB when the survivor dies.

** Rate reduced to 36% if at least 10% of the relevant estate is left to charity. Unlimited exemption for transfers between spouses/civil partners, except if UK domiciled transferor and foreign domiciled transferee, where maximum exemption £325,000.

Unlimited excemption for transfers between spouses/civil partners, except if UK domiciled transferor and foreign domiciled transferee, where maximum exemption £325,000.

100% Business Property Relief (BPR) for all shareholdings in qualifying unquoted trading companies, qualifying incorporated trading businesses and certain farmland/buildings.

Reduced tax charge on gifts within 7 years before death

Years before death 0 - 3 3 - 4 4 - 5 5 - 6 6 - 7
% of full death tax charge payable 100 80 60 40 20

Annual exemptions for lifetime gifts include £3,000 per donor and £250 per recipient.

Key dates and deadlines

Payment dates

Self assessment 2018/19 2017/18
1st payment on account 31 January 2019 2018
2nd payment on account 31 July 2019 2018
Balancing payment 31 January 2020 2019
Capital gains tax* 31 January 2020 2019

* Non-residents with gains on UK residential property must pay CGT within 30 days of disposal unless already filing a self assessment tax return.

Other payment dates

Class 1A NIC 19 July 2019 2018
Class 1B NIC 19 October 2019 2018

Corporation tax is due 9 months and 1 day from the end of the accounting period, unless a 'large' company paying by quarterly instalments.

2017/18 Filing deadlines

Issue P60s to employees 31 May 2018
P11D, P11d)b) 6 July 2017
Self assessment tax return (SATR) paper version 30 December 2018
Online SATR 31 January 2019

Useful rates

National Minimum Wage From From
Rates per hour 1.10.18 1.10.17
Aged 25 and over (National Living Wage) £7.83 £7.50
Age 21 - 24 £7.38 £7.05
Age 18 -20 £5.90 £5.60
Age 16 -17 £4.20 £4.05
Apprentices £3.70 £3.50
Child Benefit 2018/19 2017/18
First eligible child £20.70 £20.70
Each subsequent child £13.70 £13.70

You are advised to consult us before acting on any information contained herein.

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