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Tax Rate Centre

National Insurance Contributions.

Tax rate centre

National Insurance Contributions

Class 1 Employee (primary)
Payable on weekly earnings of
Below £113 (lower earnings limit) Nil
£113 – £157 (primary threshold) 0%*
£157.01 – £866 (upper earnings limit) 12%**
Above £866 2%**
* No NICs are actually payable but notional Class 1 NIC is deemed to have been paid; this protects certain state benefit entitlements.

** Over state pension age, the employee contribution is generally nil

Employer (secondary)
Up to £157 (secondary threshold) Nil
Above £157 13.8%
£157.01 – £866 (upper secondary threshold – under 21s) 0%
£157.01 – £866 (apprentice upper secondary threshold for under 25s) 0%
Employment Allowance Up to £3,000 (per year)
Class 1A (on relevant benefits) 13.8%
Class 1B (on PAYE settlement arrangement) 13.8%
Class 2 (Self employed) £2.85 per week
Small profits threshold £6,025 per annum
Class 3 (Voluntary) £14.25 per week
Class 4* (Self employed on annual profits)
£8,164 – £45,000 9%
Excess over £45,000 2%
*Exemption applies if state pension age was reached by 6 April 2017.

 

 

Income Tax

Income tax rates 2017/18 2016/17
  Starting rate limit (savings income) *£5,000 *£5,000
  Starting rate *0% *0%
Basic rate band – income up to **£33,500 £32,000
  Basic rate 20% 20%
  Dividend ordinary rate ***7.5% ***7.5%
Higher rate – income over **£33,500 £32,000
  Higher rate 40% 40%
  Dividend upper rate ***32.5% ***32.5%
Additional rate – income over £150,000 £150,000
  Additional rate 45% 45%
  Dividend additional rate ***38.1% ***38.1%
* If an individual’s taxable non-savings income exceeds the starting rate limit, then the starting rate will not be available for savings income. £1,000 of savings income for basic rate taxpayers (£500 for higher rate) may be tax-free.

** For Scottish taxpayers only the limit is £31,500.

*** The first £5,000 of dividends are tax-free

Personal allowance (PA)
Personal Allowance 1 £11,500 £11,000
Blind person’s allowance £2,320 £2,290
Married couple’s allowance (MCA)
Either partner born before 6 April 1935 (relief restricted to 10%) 2 £8,445 £8,355
Transferable tax allowance (‘Marriage Allowance’)
For certain married couples and civil partners born after 5 April 1935 (relief 20%) 3 £1,150 £1,100
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

Notes

  1. Where adjusted net income exceeds £100,000, PA is reduced in the same way until it is nil regardless of the individual’s date of birth.
  2. Allowances are reduced by £1 for every £2 that adjusted net income exceeds £28,000 (£27,700 2016/17) to a minimum MCA of £3,260 (£3,220 2016/17).
  3. Available to spouses/civil partners born after 5 April 1935, the allowance is 10% of the standard personal allowance. 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. Relief is given as a tax reduction at 20% of the transferred amount.

 

 

Capital Gains Tax

Capital gains tax rates and bands for 2017/18
On chargeable gains
Total taxable income and gains:
Up to higher rate threshold
From higher rate threshold
10%*
20%*
Trust rate
*Higher rates (18%/28%) may apply to the disposal of certain residential property and carried interest.
20%*
Annual exemption
– individual £11,300
– most trustees £5,650
Transfers between spouses or civil partners living together are generally exempt.
Chattels exemption
(proceeds per item or set) £6,000

Entrepreneurs’ Relief and Investors’ Relief

Qualifying gains will be taxed at 10%. Claims may be made on more than one occasion up to a ‘lifetime’ total of £10 million.

Corporation Tax

Financial Year to 31 March 2018 31 March 2017
Corporation Tax rate 19% 20%

 

 

Capital Allowances

Plant and Machinery:

Investment for use in Enterprise Zones, energy saving and environmentally beneficial equipment, low CO2 emission (up to 75g/km*) cars, natural gas/hydrogen refuelling equipment: First year allowance (FYA).
100%  
Annual investment allowance (AIA) – on the first £200,000 of investment
(excludes cars and other expenditure already qualifying for 100% FYA)

100%
Writing down allowance on expenditure not qualifying for AIA or FYA:
    Long-life assets, integral features of buildings, cars over 130g/km* 8%
    Other plant and machinery 18%

* The emissions figures are reduced to 50 and 110g/km respectively for expenditure incurred on or after 1 April 2018.

Value Added Tax

From 1 April 2017
Standard rate 20%
VAT fraction 1/6
Reduced rate 5%
Current Turnover Limits
Registration – last 12 months or next 30 days over £85,000
Deregistration – next 12 months under £83,000
Cash accounting scheme – up to £1,350,000
Optional flat rate scheme – up to £150,000
Annual accounting scheme – up to £1,350,000

VAT on fuel for private use in cars

Where businesses wish to reclaim the input VAT on fuel which has some degree of private use, they must account for output VAT for which they may use the flat rate valuation.

The table shows the VAT chargeable for quarters commencing on or after 1 May 2016.

CO2 emissions
(g/km)
Quarterly VAT
Flat Rate Valuation £ VAT on Charge £
0-124 116 19.33
125-129 175 29.17
130-134 186 31.00
135-139 197 32.83
140-144 209 34.83
145-149 221 36.83
150-154 233 38.83
155-159 245 40.83
160-164 256 42.67
165-169 268 44.67
170-174 279 46.50
175-179 291 48.50
180-184 303 50.50
185-189 314 52.33
190-194 326 54.33
195-199 338 56.33
200-204 350 58.33
205-209 362 60.33
210-214 373 62.17
215-219 384 64.00
220-224 396 66.00
225 and above 408 68.

 

 

Mileage Allowances

It is quite normal practice for employees to be reimbursed at a reasonable mileage rate for business use of their own vehicles. The income tax and national insurance contributions (NICs) position is as follows:

A statutory system of Approved Mileage Allowance Payments (AMAPs) applies for employees using their own vehicles for business journeys, as follows:
Cars and vans:
on the first 10,000 miles in the tax year
on each additional mile above this
45p per mile
25p per mile
Motorcycles 24p per mile
Bicycles 20p per mile

Unless the employee is reimbursed at a rate higher than the AMAP, the payments do not need to be reported on a P11D. If the employer pays less than these rates, it is possible for the employee to claim income tax relief for the shortfall.

Rates of up to 5p per mile, per passenger, are also tax and NICs free when paid for the carriage of fellow employees on the same business trip. This also covers volunteers who drive for hospital car services etc, even though they are not strictly employees.

Vehicle Benefits

Chargeable on directors and employees.

Car Benefit

The taxable benefit is calculated as a percentage of the list price of the car, on the day before it was first registered, plus certain accessories. This percentage depends upon the rate at which the car emits carbon dioxide (CO2), and the fuel type.

You can find the appropriate percentage for 2017/18 using the following table:

CO2 emissions
(g/km)
Appropriate percentage
Petrol % Diesel %
0-50 9 12
51-75 13 16
76-94 17 20
95-99 18 21
100-104 19 22
105-109 20 23
110-114 21 24
115-119 22 25
120-124 23 26
125-129 24 27
130-134 25 28
135-139 26 29
140-144 27 30
145-149 28 31
150-154 29 32
155-159 30 33
160-164 31 34
165-169 32 35
170-174 33 36
175-179 34 37
180-184 35
185-189 36
190 and above 37

CO2 emission information

For cars registered from March 2001, the definitive CO2 figure used to calculate company car tax will be that shown on the car’s V5 (Registration Document). The Vehicle Certification Agency (VCA) supplies CO2 (and other emissions) data. Information on CO2 emissions for both new (unregistered) and used (registered) cars can be found at http://carfueldata.direct.gov.uk/search-new-or-used-cars.aspx.

Reliable emissions data is not widely available for cars registered before 1 January 1998. For them, the following taxable percentages apply, regardless of fuel type:

Engine capacity Taxable %
Up to 1400cc 15%
1401 – 2000cc 22%
Over 2000cc 32%

Car fuel benefit

The taxable car fuel benefit, for 2017/18, is calculated by applying the CO2 based car benefit percentage to the car fuel benefit charge multiplier of £22,600.

If the employee pays for the full cost of all fuel for private journeys (usually including home to work) there will be no car fuel benefit. In all other cases the full tax charge will be due.

Fuel-Only Mileage Rates
HMRC advisory mileage rates from 1 March 2017 for employee private mileage reimbursement or employer reimbursement of business mileage in company cars are:
Engine Size Petrol LPG
1400cc or less 11p 7p
1401cc – 2000cc 14p 9p
Over 2000cc 22p 14p
Engine Size Diesel
1600cc or less 9p
1601cc – 2000cc 11p
Over 2000cc 13p

Example: A company car driver has a car which, on the day before it was first registered, had a list price of £21,000. It runs on petrol, and emits 177 g/km of CO2.

If we assume the driver pays tax at 40%, the 2017/18 tax bill on the car is: £21,000 x 34% x 40% = £2,856

If the employer provides any fuel used for private journeys and is not reimbursed for the cost, the 2017/18 tax bill for the fuel is: £22,600 x 34% x 40% = £3,073.60.

Company vans

The taxable benefit for the unrestricted use of company vans is £3,230 plus a further £610 of taxable benefit if fuel is provided by the employer for private travel.

Van and fuel charge Van Fuel Total
Tax (20% taxpayer) £646.00 £122.00 £768.00
Tax (40% taxpayer) £1,292.00 £244.00 £1,536.00
Tax (45% taxpayer) £1,453.50 £274.50 £1,728.00
Employer’s class 1A NICs £445.74 £84.18 £529.92

Van drivers can avoid a benefit charge if they agree not to use the van for personal journeys. Driving to and from work is acceptable so long as there is a reasonable amount of business use.

The flat rate of £3,230 is reduced by 80% to £646 for vans which cannot produce C02 engine emissions under any circumstances when driven. There is no fuel benefit for such vans.

 

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