Tax Rates and Allowances 2016/17
Many of the tax rates and allowances are fundamental to our business and personal lives and the main ones for the 2016/17 tax year are summarised here. We are sure that you will find it a useful point of reference throughout the coming tax year but if you have any questions please do not hestitate to contact us
- See personal allowances and tax bands for 2016/17 here
- Is a company car still a tax efficient option in 2016/17?
- Read about the changes to non-residential stamp duty here
- You can see our Budget 2016 summary here
Please navigate our tax rates 2016/17 summary by using the tabs below.
Capital Allowances
Plant and machinery – Annual Investment Allowance (AIA)
The AIA gives a 100% write-off on most types of plant and machinery costs, including integral features and long life assets but not cars, of up to £200,000 p.a. for expenditure incurred on or after 1 January 2016. The previous rate was £500,000 p.a. Special rules apply to accounting periods straddling this date.
Any costs over the AIA fall into the normal capital allowance pools below. The AIA may need to be shared between certain businesses under common ownership.
Other plant and machinery allowances
The annual rate of allowance is 18%. An 8% rate applies to expenditure incurred on integral features and on long life assets.
A 100% first year allowance may be available on certain energy efficient plant and cars, including expenditure incurred on new and unused zero emission goods vehicles.
Cars
For expenditure incurred on cars, costs are generally allocated to one of the two plant and machinery pools. Cars with CO2 emissions not exceeding 130gm/km receive an 18% allowance p.a. Cars with CO2emissions over 130gm/km receive an 8% allowance p.a.
Capital Gains Tax
2016/17**£ |
2015/16£ |
|
Individuals | ||
Exemption | 11,100 | 11,100 |
Standard rate | 10% | 18% |
Higher rate* | 20% | 28% |
Trusts | ||
Exemption | 5,550 | 5,550 |
Rate | 20% | 28% |
*For higher and additional rate taxpayers. **Higher rates may apply to the disposal of certain residential property. |
||
Entrepreneurs’ Relief The first £10m of qualifying gains are charged at 10%. Gains in excess of the limit are charged at the rates detailed above. |
Car, Van and Fuel Benefits
Company cars 2016/17
CO2 emissions (gm/km)(round down to nearest 5gm/km) |
% of car’s list price taxed |
0-50* | 7 |
51-75* | 11 |
76-94* | 15 |
95 | 16 |
100 | 17 |
105 | 18 |
110 | 19 |
115 | 20 |
120 | 21 |
125 | 22 |
130 | 23 |
135 | 24 |
140 | 25 |
145 | 26 |
150 | 27 |
155 | 28 |
160 | 29 |
165 | 30 |
170 | 31 |
175 | 32 |
180 | 33 |
185 | 34 |
190 | 35 |
195 | 36 |
200 and above | 37 |
- For diesel cars add a 3% supplement but maximum still 37%.
- For cars registered before 1 January 1998 the charge is based on engine size.
- The list price includes accessories and is not subject to an upper limit.
- The list price is reduced for capital contributions made by the employee up to £5,000.
- Special rules may apply to cars provided for disabled employees.
*Rounding down to the nearest 5gm/km does not apply.
Car fuel benefit 2016/17
£22,200 x ‘appropriate percentage’*
*Percentage used to calculate the taxable benefit of the car for which the fuel is provided.
The charge does not apply to certain environmentally friendly cars.
The charge is proportionately reduced if provision of private fuel ceases part way through the year. The fuel benefit is reduced to nil only if the employee pays for all private fuel.
Van benefit per vehicle 2016/17
- Van benefit £3,170
- Fuel benefit £598
The charges do not apply to vans if a ‘restricted private use condition’ is met throughout the year.
A reduced charge may be due if the van cannot in any circumstances emit CO2 by being driven.
Corporation Tax
Year to 31.3.17 |
Year to 31.3.16 |
||
Profits band £ |
Rate % |
Profits band £ |
Rate % |
All profits | 20 | All profits | 20 |
Different rates apply for ring-fenced (broadly oil industry) profit.
Income Tax Rates
2016/17 |
2015/16 |
||
Band £ | Rate % | Band £ | Rate % |
0 – 5,000 | 0* | 0 – 5,000 | 0* |
0 – 32,000 | 20** | 0 – 31,785 | 20** |
32,001 – 150,000 | 40♦ | 31,786 – 150,000 | 40♦ |
Over 150,000 | 45† | Over 150,000 | 45† |
*Only applicable to savings income. The rate is not available if taxable non-savings income exceeds £5,000. For 2016/17, £1,000 of savings income for basic rate taxpayers (£500 for higher rate) may be tax free.
** Except dividends 7.5% (0%).
♦ Except dividends 32.5% (25%).
† Except dividends 38.1% (30.6%).
Other income taxed first, then savings income and finally dividends. For 2016/17 the first £5,000 of dividends are tax free.
Income Tax Reliefs
2016/17 |
2015/16 |
|
Personal allowance | ||
– born after 5 April 1938 | £11,000** | £10,600** |
– born before 6 April 1938* | £11,000** | £10,660** |
(Reduce personal allowance by £1 for every £2 of adjusted net income over £100,000.)**£1,100 (£1,060) may be transferable between certain spouses where neither pay tax above the basic rate. | ||
Married couple’s allowance (relief at 10%)*(Either partner 75 or over and born before 6 April 1935.) | £8,355 | £8,355 |
– min. amount | £3,220 | £3,220 |
*Age allowance income limit(Reduce age allowance by £1 for every £2 of adjusted net income over £27,700.) | £27,700 | £27,700 |
Blind person’s allowance | £2,290 | £2,290 |
Individual Savings Accounts
2016/17 and 2015/16 |
|
Overall investment limit | £15,240 |
Junior account limit | £4,080 |
Inheritance Tax
Death
|
Lifetime
|
Chargeable transfers
|
Nil | Nil | 0 – £325,000* |
40% | 20% | Over £325,000* |
*Potentially increased for surviving spouses or civil partners who die on or after 9 October 2007.
Reliefs |
||||
Annual exemption | £3,000 | Marriage | – parent | £5,000 |
Small gifts | £250 | – grandparent | £2,500 | |
– bride/groom | £2,500 | |||
– other | £1,000 |
Reduced charge on gifts within seven years of death |
|||||
Years before death | 0-3 | 3-4 | 4-5 | 5-6 | 6-7 |
% of death charge | 100 | 80 | 60 | 40 | 20 |
Statutory Pay Rates
Weekly benefit |
2016/17 |
2015/16 |
|
Basic retirement pension | – single person | £119.30 | £115.95 |
– married couple | £190.80 | £185.45 | |
New state pension | £155.65 | – | |
Statutory pay rates – average weekly earnings £112 or over | |||
Statutory Sick Pay | £88.45 | £88.45 | |
Statutory Maternity and Adoption Pay | |||
– First six weeks | 90% of weekly earnings | ||
– Next 33 weeks | £139.58* | £139.58* | |
Statutory Paternity Pay – two weeks | £139.58* | £139.58* | |
* Or 90% of weekly earnings if lower. |
Mileage Allowance Payments
2016/17 and 2015/16 |
|
Cars and vans |
Rate per mile |
Up to 10,000 miles | 45p |
Over 10,000 miles | 25p |
Bicycles | 20p |
Motorcycles | 24p |
These rates represent the maximum tax free mileage allowances for employees using their own vehicles for business. Any excess is taxable. If the employee receives less than the statutory rate, tax relief can be claimed on the difference.
National Insurance
Class 1 (employed) rates |
|||
Employee | Employer** | ||
Earnings per week | % | Earnings per week** | % |
Up to £155 | Nil* | Up to £156 | Nil |
£155.01 – £827 | 12 | Over £156 | 13.8** |
Over £827 | 2 | ||
*Entitlement to contribution-based benefits retained for earnings between £112 and £155 per week.**The rate is 0% for employees under 21 and apprentices under 25 on earnings up to £827 per week. |
Class 1A (employers) | 13.8% on employee taxable benefits |
Class 1B (employers) | 13.8% on PAYE Settlement Agreements |
Class 2 (self-employed) | flat rate per week £2.80 small profits threshold £5,965 p.a. |
Class 3 (voluntary) | flat rate per week £14.10 |
Class 4 (self-employed) | 9% on profits between £8,060 and £43,000 plus 2% on profits over £43,000 |
Pensions Premiums
2016/17 and 2015/16
Tax relief available for personal contributions: higher of £3,600 (gross) or 100% of relevant earnings (max. £40,000). Any contributions in excess of £40,000, whether personal or by the employer, may be subject to income tax on the individual.
The limit may be reduced to £10,000 once money purchase pensions are accessed. Where the £40,000 limit is not fully used it may be possible to carry the unused amount forward for three years.
Employers will obtain tax relief on employer contributions if they are paid and made ‘wholly and exclusively’. Tax relief for large contributions may be spread over several years.
Land and Buildings Transaction Tax
Land and buildings in Scotland
Rate♦% | Residential£ | Non-residential£ | Rate% |
0 | 0 – 145,000 | 0 – 150,000 | 0 |
2 | 145,001 – 250,000 | 150,001 – 350,000 | 3 |
5 | 250,001 – 325,000 | Over 350,000 | 4.5 |
10 | 325,001 – 750,000 | ||
12 | Over 750,000 |
The rates apply to the portion of the total value which falls within each band in respect of transactions with an effective date on or after 1 April 2015.
♦Rates may be increased by 3% where further residential properties costing £40,000 or over are acquired on or after 1 April 2016.
Stamp Duty and Stamp Duty Land Tax
Land and buildings in England, Wales and N. Ireland
Rate♦ % |
Residential* £ |
Non-residential** £ |
Rate % |
0 | 0 – 125,000 | 0 – 150,000 | 0 |
2 | 125,001 – 250,000 | 150,001 – 250,000 | 2 |
5 | 250,001 – 925,000 | Over 250,000 | 5 |
10 | 925,001 – 1,500,000 | – | – |
12 | Over 1,500,000 | – | – |
*Payable on consideration which falls in each bracket.
**Payable on consideration which falls in each bracket from 17 March 2016.
♦Rates may be increased by 3% where further residential properties costing £40,000 or over are acquired on or after 1 April 2016.
SDLT is charged at 15% on interests in residential dwellings costing more than £500,000 purchased by certain non-natural persons.
Shares and securities – rate 0.5%.
Tax Relief for Individuals
2016/17 and 2015/16
Enterprise Investment Scheme (EIS)
Relief on investments in certain unquoted trading companies up to £1m p.a.:
- Income tax relief at 30%.
- Capital gains exemption on disposal.
Unlimited amounts of capital gains from the disposal of other assets may be able to be deferred by making an EIS investment.
Seed Enterprise Investment Scheme (SEIS)
Relief on investments in certain unquoted trading companies up to £100,000 p.a.:
- Income tax relief at 50%.
- Capital gains exemption on disposal.
Capital gains from the disposal of other assets may be exempt up to £50,000 p.a. by making an SEIS investment.
Venture Capital Trusts (VCTs)
Relief on investments in certain quoted companies up to £200,000 p.a.:
- Income tax relief at 30%.
- Capital gains exemption on disposal.
Dividends received from VCTs may be exempt from income tax.
Social Investment Relief (SIR)
Relief on investments in certain social enterprises (including charities) up to £1m p.a.:
- Income tax relief at 30%.
- Capital gains exemption on disposal.
Capital gains from the disposal of other assets may be able to be deferred by making an SIR investment up to £1m p.a.
(All reliefs subject to detailed conditions being met.)
Value Added Tax
Standard rate | 20% |
Reduced rate | 5% |
Annual Registration Limit – from 1.4.16 (1.4.15 – 31.3.16 £82,000) | £83,000 |
Annual Deregistration Limit – from 1.4.16 (1.4.15 – 31.3.16 £80,000) | £81,000 |
This publication is published for the information of clients. It provides only an overview of the regulations in force at the date of publication and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this publication can be accepted by the authors or the firm.
For more information
For more information on anything discussed in this article or if you would like some tax planning advice please contact your usual Hawsons contact. Alternatively, please contact your nearest office to arrange your free initial meeting.
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