Tax Rates

Find the latest tax rates for 2017/18 here. Get in touch with us for more information or for more advice on using these tax rates.

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

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.

Corporation Tax

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

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 68.00
Weekly Benefit
2017/18 2016/17
Basic Retirement Pension
Single person £122.30 £119.30
Couple £195.60 £190.80
Pension Credit Standard Minimum Guarantee
Single person £159.35 £155.60
Couple £243.25 £237.55
New State Pension
£159.55 £155.65
Child Benefit
First eligible child £20.70 £20.70
Each subsequent child £13.70 £13.70
Statutory Sick Pay (SSP)
Average weekly earnings £113 or over (2016/17 £112) £89.35 £88.45
Statutory Maternity Pay (SMP)
90% of average weekly pay First 6 weeks First 6 weeks
Lower of £140.98 (2016/17 £139.58) or 90% average weekly earnings Next 33 weeks Next 33 weeks
Minimum rate £101.70 £100.80
Statutory Adoption Pay (SAP) 39 weeks 39 weeks
Statutory Paternity Pay (SPP)* 2 weeks 2 weeks
Shared Parental Pay Up to 37 weeks, depending on mother’s unused SMP period Up to 37 weeks, depending on mother’s unused SMP period
SAP, SPP and Shared Parental Pay
Lower of £140.98 (2016/17 £139.58) or 90% average weekly earnings
Minimum rate £101.70 £100.80
Jobseeker’s Allowance
Single person (25 or over) £73.10 £73.10
Couple (both 18 or over) £114.85 £114.85
National Living Wage From 1 April 2017 From 1 April 2016
Age 25 and over £7.50 £7.20
National Minimum Wage From 1 April 2017 From 1 Oct 2016
21 – 24 £7.05 £6.95
18 – 20 £5.60 £5.55
16 and 17 £4.05 £4.00
Apprentices* £3.50 £3.40
*Rate applies to apprentices under 19, or those 19 and over in the first year of apprenticeship.
Universal Credit (monthly rates)
Single person (25 or over) £317.82 £317.82
Couple (where one or both 25 or over) £498.89 £498.89