Personal Tax allowance
The personal allowance is the amount earnt before income tax becomes due.
The personal allowance is £12,570 for those earning less that £100,000.
If you earn between £100,000 and £125,000, the allowance reduces by £1 for every £2 earnt above £100,000 until it reaches 0
If earnings are over £125,000, you will not have any personal allowance.
Income tax rates
This is the rate of tax on earnt income, which may include income from employment, self-employment, pensions and rental income.
Band | Income level | Tax Rate |
Personal Allowance | £12,570 | 0% |
Basic Rate | £12,571 to £50,270 | 20% |
Higher Rate | £50,271 to £125,140 | 40% |
Additional Rate | Over £125,140 | 45% |
Savings Allowances
The savings allowance allows you to earn interest on savings without paying tax. The amount of interest tax free depends on your income band level. Interest earnt over this will be taxed at your income tax rate.
Note savings in ISA's are exempt from tax and should not be included.
Income Band | Allowance |
Starting rate (income less than £17,570) | £5,000 |
Basic rate | £1,000 |
Higher rate | £500 |
Additional rate | £0 |
Student Loans
Plan | Threshold for repayment | Repayment rate |
Plan 1 | £22,015 | 9% |
Plan 2 | £27,295 | 9% |
Postgraduate loan | £21,000 | 6% |
Plan 4 | £25,375 | 9% |
Corporation tax rate
Corporation tax is the tax rate companies pay on all profits after allowances. This has increased this period for businesses with profits over £50,000.
Band | Limits | Tax rate |
Small Profits Rate | Up to £50,000 | 19% |
Marginal Releif | Between £50,000 and £250,000 | Marginal relief at 3/200 (26.5%) |
Main Rate | Over £250,000 | 25% |
Dividend tax rates
There is a £2,000 tax free allowance for dividends, after which tax will be charged at the following rates depending on your income tax band.
Note dividends from a stocks and shares ISA are tax free and should not be included.
Tax Band | Tax rate |
Basic rate | 8.75% |
Higher rate | 33.75% |
Additional rate | 39.35% |
Capital Gains tax
The Annual exempt amount is £6,000, after which tax is charged at the following rates depending on tax bracket. Note that the disposal of rental properties has a different rate to other gains.
Tax Bracket | Tax rate |
Basic rate | 10% |
Higher rate | 20% |
Basic rate (Property) | 18% |
Higher rate (Property) | 28% |
Gains qualifying for entrepreneurs' releif | 10% |
Allowances
Marriage allowance - £1,260
Married Couples Allowance - £10,375
Blind person's allowance - £2,870
Pension contribution maximum allowance - £60,000
VAT
The threshold for VAT registration is £85,000 in any 12month period.
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