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In this document you will find:
- Capital Allowances
- Capital Taxes
- Corporation Tax
- Duties
- Income Tax Rates and Bands
- Individuals
- Inheritance Tax
- Investments
- ISAs
- National Insurance
- Private Residences
- Tax Free Mileage Allowances
- VAT
Capital Allowances
| 1 or 6 April 2014 to 31 December 2015 | From 1 January 2016 | |
| From: | ||
|---|---|---|
| Main rate pool: writing down allowance |
18% | 18% |
| Special rate pool (long life assets, integral features): writing down allowance | 8% | 8% |
| Annual Investment Allowance (AIA) cap: | £500,000 | £200,000 |
Expenditure within the AIA qualifies for 100% allowance in the year of purchase. The AIA cap is currently £200,000 from the 1st January 2016 for a 12-month period. If the accounting period is shorter or longer than 12-months the AIA cap is apportioned based on the length of the period.
The AIA allowance allows businesses to invest in equipment and fixtures (cars and buildings don't qualify), with 100% tax relief in the year of purchase.
Capital Taxes
Enveloped Dwellings
The annual tax on enveloped dwellings (ATED) applies where a residential property located in the UK is owned by a non- natural person such as; a company, partnership with a corporate member or a collective investment scheme. There are a large number of reliefs and exemptions from the charge, but where such a relief does not apply the ATED charge must be paid by 30 April within the year at the following rates:
| Property value £ | Annual charge 2017/18 £ | Annual charge 2018/19 £ |
| Up to 500,000 | Nil | Nil |
| 500,001 to 1,000,000 | 3,500 | 3,600 |
| 1,000,001 - 2,000,000 | 7,050 | 7,250 |
| 2,000,001 - 5,000,000 | 23,550 | 24,250 |
| 5,000,001 - 10,000,000 | 54,950 | 56,550 |
| 10,000,001 - 20,000,000 | 110,100 | 113,400 |
| Over £20,000,000 | 220,350 | 226,950 |
*2018/19 figures were announced at Autumn Budget 2017 and are subject to enactment.
Capital Gains Tax
The rates and annual exemption for capital gains tax are as follows:
| 2017/18 (£) | 2018/19 (£) | |
| Annual exemption | £11,300 | £11,700 |
| Annual exemption for most trustees and personal representatives | £5,650 | £5,850 |
| Rate for gains within the basic rate band | 10% | 10% |
| Rate for gains above the basic rate band | 20% | 20% |
| Gains on residential property (that do not qualify for private residence relief) within the basic rate band | 18% | 18% |
| Gains on residential property (that do not qualify for private residence relief) above the basic rate band | 28% | 28% |
| Rate for gains subject to entrepreneurs" relief | 10% | 10% |
| Lifetime limit for gains subject to entrepreneurs" relief | £10 million | £10 million |
*2018/19 figures were announced at Autumn Budget 2017 and are subject to enactment.
Corporation Tax
Rates
The corporation tax rates for small and large companies was aligned at 20% from April 2015. This removed the need for the associated companies rule and the marginal rate of corporation tax was also abolished. The rates for the three financial years to 31 March 2020 are as follows:
| Year beginning 1 April: | 2015 | 2016 | 2017 |
| 20% | 20% | 19% |
| Year beginning 1 April: | 2018 | 2019 | 2020 |
| 19% | 19% | 17% |
Research and Development (R&D)
Small and medium (SME) companies can claim enhanced deductions for expenditure on R&D projects at 230% of qualifying expenditure. Where the deduction is claimed and the company makes a loss, it can claim a cash credit from HMRC of 14.5% of that loss.
Research and Development Expenditure Credit (RDEC) scheme
Large companies can claim an 11% uplift on the following qualifying expenditure:
- Staffing costs
- Expenditure on externally provided workers
- Software and materials
- Contributions to independent research
- Subcontractors of qualifying bodies and individuals/partnerships
RDEC differs from the previous R&D scheme for large companies as it is an 'above the line' tax credit and can be accounted for in the profit/loss statement.
Enterprise Zones
Around 53 enterprise zones have been formed around the country to encourage investment and job formation. Businesses in some of those zones can claim 100% capital allowances on the equipment they use within the zone. The period for which those 100% allowance are available has been extended by three years to 31 March 2020.
Duties
Stamp Duty Land Tax
Residential Land or property
From 4th December 2014, Stamp Duty Land Tax (SDLT) is charged at each rate on the portion of the purchase price which falls within each rate band.
From 1st April 2016, if buying a residential property means you'll own more than one, you'll normally be subject to an additional 3% charge on the rates detailed below.
| Rate | Property value band |
| 0% | 0 to £125,000 |
| 2% | Over £125,000 - £250,000 |
| 5% | Over £250,000 - £925,000 |
| 10% | Over £925,000 - £1.5 million |
| 12% | Over £1.5 million |
Non-Residential or mixed property
| Rate from 17 March 2016 | Purchase price/lease premium or transfer value |
| 0% | Up to £150,000 |
| 2% | £150,001 to £250,000 |
| 5% | Over £250,000 |
Lease rentals
| Effective date | Residential property | Non-residential or mixed property | Rate |
| NPV of rents | NPV of rents | % | |
| From 17 March 2016 | Up to £125,000 | Up to £150,000 | 0 |
| Over £125,000 | £150,001 to £5m | 1 | |
| N/A | Over £5m | 2 | |
| From 1 January 2010 | Up to £125,000 | Up to £150,000 | 0 |
| Over £125,000 | Over £150,000 | 1 |
Where the chargeable consideration includes rent, SDLT is payable on the lease premium and on the ‘net present value’ (NPV) of the rent payable.
Where the annual rent for the lease of non-residential property amounts to £1,000 or more, the 0% SDLT band is unavailable in respect of any lease premium
Income Tax Rates and Bands
Recent income tax rates and bands are as follows:
| 2015/16 | 2016/17 | 2017/18 | |
| Savings rate: 10%, 0% from 2015/16 | 0 - £5,000 | 0- £5,000 | 0- £5,000 |
| Dividend Allowance: 20% | NA | 0 - £5,000 | 0 - £5,000 |
| Basic rate: 20% | 0 - £31,785 | 0 - £32,000 | 0 - £33,500 |
| Higher rate: 40% | £31,786 - £150,000 | £32,001 - £150,000 | £33,501 - £150,000 |
| Additional rate: 45% | Over £150,000 | Over 150,000 | Over 150,000 |
Autumn 2017 Budget announced the following income tax rates and bands for 2018/19:
| 2018/19 | |
| Savings rate : 0% | 0 - £5,000 |
| Dividend Allowance: 20% | £2,000 |
| Basic rate: 20% | 0 - £34,500 |
| Higher rate: 40% | £34,501 - £150,000 |
| Additional rate: 45% | Over £150,000 |
When the personal allowance is taken into account an individual will start to pay tax at 40% when their total income exceeds £45,000 in 2017/18. This is expected to rise to £46,350 for 2018/19. This threshold (and the 45% threshold) can be increased if the taxpayer pays personal pension contributions or makes gift aid donations.
For 2017/18 the basic rate band on non-savings income for Scottish Taxpayers is set at £43,000. For all other income types it remains in line with the main UK band of £45,000.
Scottish Income Tax Rates and Bands for non-savings income
| 2018/19 | |
| Starter rate: 19% | Up to £2,000 |
| Basic rate: 20% | £2,001 to £12,150 |
| Intermediate rate: 21% | £12,151 to £31,580 |
| Higher rate: 41% | £31,581 - £150,000 |
| Additional rate: 46% | Over £150,000 |
Individuals
Personal Allowances
The standard personal allowance is £11,500 for 2017/18. Autumn 2017 Budget announced that the allowance will rise to £11,850 from 6 April 2018.
The transferrable marriage allowance applies from 6 April 2015 to couples (married or civil partners) where neither person pays tax at the 40% or 45% rates. The spouse who cannot use all their personal allowance against their own income may opt to transfer 10% of their personal allowance to their spouse or civil partner.
The personal allowance is tapered away for individuals who have income over £100,000, at the rate of £1 for every £2 of income above that threshold.
The allowances for recent years are as follows:
| 2016/17 (£) | 2017/18 (£) | 2018/19 (£) | |
| Personal Allowances | 11,000 | 11,500 | 11,850 |
| Minimum married couples allowance* | 3,220 | 3,260 | 3,360 |
| Maximum married couples allowance* | 8,335 | 8,445 | 8,695 |
| Marriage allowance | 1,100 | 1,150 | 1,185 |
| Blind person's allowance | 2,290 | 2,320 | 2,390 |
| Income limit for allowances for Married couple’s allowance | 27,700 | 28,000 | 28,900 |
| Income limit for standard allowances | 100,000 | 100,000 | 100,000 |
| Personal allowance removed completely at: | 122,000 | 123,000 | 123,700 |
*2018/19 figures were announced in the 2017 Autumn Budget and are subject to enactment.
Inheritance Tax
The inheritance tax (IHT) nil rate band will remain frozen at £325,000 until April 2021, and the rates of IHT payable on death remain unchanged at 40% or 36% where at least 10% of the net estate is left to charity.
The government will consult on extending the existing IHT exemption for the estates of members of the armed forces, whose death is caused or hastened by injury while on active service, to members of the emergency services.
An additional nil-rate band (the ‘residence nil rate band’ (RNRB)) was introduced from 2017/18 and applies when a residence is passed on death to direct descendants.The RNRB is being phased in between 2017/18 and 2020/21 as follows:
- £100,000 in 2017/18
- £125,000 in 2018 /19
- £150,000 in 2019/20
- £175,000 in 2020/21
The value of RNRB is tapered away at £1 for every £2 by which the value of the total estate exceeds £2 million.
Investments
Seed Enterprise Investment Scheme (SEIS)
SEIS was introduced to encourage people to invest in companies that have just started trading by offering tax reliefs to investors that buy shares in the company.
The table below shows the income and capital gains tax reliefs that apply:
| SEIS | |
| Rate of income tax relief | 50% |
| Maximum investment qualifying for income tax relief | £100,000 |
| Gains exempt from CGT relief on investment in SEIS shares: | 50% |
Enterprise Investment Scheme (EIS)
EIS is available to companies that are looking to grow by offering tax reliefs to investors that buy new shares in the company.
The table below shows the income and capital gains tax reliefs that apply:
| EIS | |
| Rate of income tax relief | 30% |
| Maximum investment qualifying for income tax relief | £1,000,000 |
| Gains exempt from CGT relief on investment in SEIS shares: | 100% |
Social Investment Tax Relief (SITR)
SITR is available to encourage people to support social enterprises.
The table below shows the income and capital gains tax reliefs that apply:
| SITR | |
| Rate of income tax relief | 30% |
| Maximum investment qualifying for income tax relief | £1,000,000 |
| Gains exempt from CGT relief on investment in EIS shares: | 100% |
Venture Capital Trusts (VCTs)
VCTs are available to encourage people to invest in companies and social enterprises that are not listed on any recognised stock exchange.
The table below shows the income and capital gains tax reliefs that apply:
| VTC | |
| Rate of income tax relief | 30% |
| Maximum investment qualifying for income tax relief | £200,000 |
ISAs
The ISA investment limits are as follows:| 2016/2017 | 2017/2018 | |
|---|---|---|
| ISA for shares and/or cash | £15,240 | £20,000 |
| Junior ISA and Child Trust Fund | £4,080 | £4,080 |
From 1 December 2015 first time buyers can open a help to buy ISA to help save for their first home. The Government will contribute a 25% bonus, up to £3,000 per ISA which is paid when the funds are used to buy the home.
From 6 April 2017 UK resident individuals aged between 18 and 40 may open a lifetime ISA to save up to £4,000 per year. The Government will contribute a 25% bonus up to £1,000 per year. The funds can be withdrawn from age 60 onwards or when the saver is terminally ill. The savings may also be used to help purchase the saver’s first home worth up to £450,000, after the account has been open for at least 12 months. The Government bonus will be lost if the funds are accessed for other purposes.
Premium Bonds
Individuals may invest up to £50,000 in premium bonds. Any winnings are tax free. The odds of winning a prize for each £1 bond number are currently 24,500 to 1. The annual prize fund interest rate is currently 1.40% (December 2017). There are two £1m prizes and four £100,000 prizes per month.National Insurance
The rates and thresholds for National Insurance Contributions for 2017/18 are:
| Class: | Weekly earnings | Rate |
| Employer's class 1 above primary threshold | Above £157 | 13.8% |
| Employee's class 1 | From £157 to £866 | 12% |
| Employee's additional class 1 | Above £866 | 2% |
| Married woman's rate* | From £157 to £866 | 5.85% |
| Self-employed class 2 (per week) | - | £2.85 |
| Share fishermen class 2 (per week) | - | £3.50 |
| Volunteer development workers class 2 | - | £5.65 |
| Class 3 ( per week) | - | £14.25 |
| Annual profit thresholds | ||
| Self-employed class 4 | From £8,164 to £45,000 | 9% |
| Self-employed class 4 additional rate | Above £45,000 | 2% |
*only available for women who made a valid married woman's election before 11 May 1977.
Autumn Budget 2017 announced the following rates for 2018/19 (subject to enactment)
| Class: | Weekly earnings | Rate |
| Employer's class 1 above primary threshold | Above £162 | 13.8% |
| Employee's class 1 | From £162 to £892 | 12% |
| Employee's additional class 1 | Above £892 | 2% |
| Married woman's rate* | From £162 to £892 | 5.85% |
| Self-employed class 2 (per week) | - | £2.95 |
| Share fishermen class 2 (per week) | - | £3.60 |
| Volunteer development workers class 2 | - | £5.80 |
| Class 3 ( per week) | - | £14.65 |
| Annual profit thresholds | ||
| Self-employed class 4 | From £8,424 to £46,350 | 9% |
| Self-employed class 4 additional rate | Above £46,350 | 2% |
*only available for women who made a valid married woman's election before 11 May 1977.
Self-employed
From April 2016 class 2 NICs will be collected through self-assessment, rather than been paid as a separate direct debit on a monthly or six-monthly basis.
Private Residences
Main residence relief (also known as ‘principal private residence’ relief (PPR)) provides relief from capital gains tax on the disposal of (or of an interest in) a dwelling which has been the individual’s only or main residence, and on land enjoyed with that residence as its garden or grounds up to half a hectare, or more if the additional land is required for the reasonable enjoyment of the property.
The relief is time apportioned for periods of occupation, and for certain periods of deemed occupation. In particular, relief for the final 18 month period of ownership is given, if the property was at some time the individual’s only or main residence.
Where two or more properties are owned, the taxpayer may elect, within certain time limits, which property is to be treated as his main residence.
Married couples and civil partners may have only one main residence at any time between them which qualifies for the relief.
Lettings relief
If the main residence has been wholly or partly let as residential accommodation at any time in the period of ownership, lettings relief can provide an exemption for gains limited to the lower of:
- the gain attributable to the let period;
- £40,000 per owner; and
- the gain exempt as main residence relief.
Tax Free Mileage Allowances
| First 10,000 business miles in the tax year | Each mile over 10,000 miles in the tax year | Extra passenger making same trip | |
| Cars and vans | 45p | 25p | 5p |
| Motorcycles | 24p | 24p | N/A |
| Bicycles | 20p | 20p | N/A |
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.
VAT
Rates
The VAT rates and thresholds are as follows:
| From | 1 April 2014 | 1 April 2015 | 1 April 2016 | 1 April 2017 |
| Lower rate | 0% | 0% | 0% | 0% |
| Reduced rate | 5% | 5% | 5% | 5% |
| Standard rate | 20% | 20% | 20% | 20% |
| Registration turnover | £81,000 | £82,000 | £83,000 | £85,000 |
| Deregistration turnover | £79,000 | £80,000 | £81,000 | £83,000 |
| Acquisitions from EU member states, registration and deregistration threshold | £81,000 | £82,000 | £83,000 | £85,000 |
Note: Autumn Budget 2017 announced that the VAT registration and deregistration thresholds will remain unchanged from 1 April 2018.
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