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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 2016/17 £ | Annual charge 2017/18 £ |
| Up to 500,000 | Nil | Nil |
| 500,001 to 1,000,000 | 3,500 | 3,500 |
| 1,000,001 - 2,000,000 | 7,000 | 7,050 |
| 2,000,001 - 5,000,000 | 23,350 | 23,550 |
| 5,000,001 - 10,000,000 | 54,450 | 54,950 |
| 10,000,001 - 20,000,000 | 109,050 | 110,100 |
| Over £20,000,000 | 218,200 | 220,350 |
Capital Gains Tax
The rates and annual exemption for capital gains tax are as follows:
| 2016/17 (£) | 2017/18 (£) | |
| Annual exemption | £11,100 | £11,100 |
| Annual exemption for most trustees and personal representatives | £5,550 | £5,550 |
| 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 |
Corporation Tax
Rates
The corporation tax rates for small and large companies will be aligned at 20% from April 2015. This will remove the need for the associated companies rule and the marginal rate of corporation tax will disappear. The rates for the three financial years to 31 March 2017 have been announced as:
| Year beginning 1 April: | 2015 | 2016 | 2017 |
| 20% | 20% | 19% |
| Year beginning 1 April: | 2018 | 2019 | 2020 |
| 19% | 19% | 18% |
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 46 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) will be 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 land or property
| Rate | Purchase price/lease premium or transfer value |
| 0% | Up to £150,000 |
| 1% | £150,001 to £250,000 |
| 5% | Over £250,000 |
Higher rate for corporate bodies
From 20 March 2014 residential properties bought for over £500,000 are subject to SDLT at the rate of 15% where the property is acquired by a non-natural person such as a company, partnership or collective investment scheme. For sales in the period: 22 March 2012 to 19 March 2014 the 15% rate of SDLT only applied to properties sold for £2 million or more where the buyer was a non-natural person.
Non-Residential land or property
| Rate | Residential | Non-residential/mixed use |
| 0% | £0 - £125,000 | £0 - £150,000 |
| 1% | Over £125,000 | Over £150,000 |
Please note that when calculating duty payable on the 'NPV' (Net Present Value) of leases, you must reduce your 'NPV' calculation by the following before applying the 1% rate.
Residential - £125,000
Non-Residential - £150,000
Duty on premium is the same as for transfers of land (except special rules apply for premium on non-residential properties where the rent exceeds £1000 annually).
Income Tax Rates and Bands
Income tax rates are to remain the same to 5 April 2016, with the exception of the savings rate. This will be cut to 0% from 6 April 2015. However, the savings rate only applies if individual's net non-savings taxable income does not exceed the savings rate limit.
The income tax rates and bands have been announced as:
| 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 |
When the personal allowance is taken into account an individual will start to pay tax at 40% when their total income exceeds £43,000 in 2016/17 and £45,000 in 2017/18. This threshold (and the 45% threshold) can be increased if the taxpayer pays personal pension contributions or makes gift aid donations.
From 2017/18 the basic rate band on non-savings income for Scottish Taxpayers will be set at £43,000. For all other income types it will remain in line with the main UK band of £45,000.
Individuals
Personal Allowances
The standard personal allowance will rise to £11,500 from 6 April 2017. The age related allowances are gradually falling in line with age-related allowances given to taxpayers born since April 1948.
The transferrable allowance will apply 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 will be able to 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 have been announced as follows:
| 2015/16 (£) | 2016/17 (£) | 2017/18 (£) | |
| Born after 5 April 1948 | 10,600 | 11,000 | 11,500 |
| Born after 5 April 1938 before 4 April 1948 | 10,600 | 11,000 | 11,500 |
| Born before 6 April 1938 | 10,660 | 11,000 | 11,500 |
| Minimum married couples allowance* | 3,220 | 3,220 | 3,260 |
| Maximum married couples allowance* | 8,335 | 8,335 | 8,445 |
| Transferable portion of allowance | 1,060 | 1,100 | 1,150 |
| Blind person's allowance | 2,290 | 2,290 | 2,320 |
| Income limit for allowances for age related allowances | 27,700 | 27,700 | 28,000 |
| Income limit for standard allowances | 100,000 | 100,000 | 100,000 |
| Personal allowance removed completely at: | 121,200 | 122,000 | 123,000 |
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.
The government will introduce an additional nil-rate band when a residence is passed on death to direct descendants. This will be £100,000 in 2017 to 2018, £125,000 in 2018 to 2019, £150,000 in 2019 to 2020, and £175,000 in 2020 to 2021
Investments
Seed Enterprise Investment Scheme (SEIS)
The SEIS was introduced for a limited five year period from 1 April 2012. The SEIS has now been made permanent, with the income tax and capital gains tax reliefs applying as shown below for all future years.
| SEIS | 2016/17 | 2017/18 |
| Rate of income tax relief | 50% | 50% |
| Maximum investment qualifying for income tax relief | £100,000 | £100,000 |
| Gains exempt from CGT relief on investment in SEIS shares: | 50% | 50% |
Venture Capital Trusts (VCTs)
Investing in VCT shares gives the taxpayer 30% income tax relief on up to £200,000 invested per tax year, and the shares are generally exempt from capital gains tax when sold. However, the Government thinks that VCTs have been abused, so the following changes will be made from 6 April 2014:
- tax relief is withdrawn if the shares are disposed of within five years;
- the VCT will not be permitted to return capital to its members within three years of the shares being subscribed for; and
- VCT investments that are linked to share buy-backs will be denied tax relief.
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 |
Premium Bonds
Individuals have been limited to the amount they hold in premium bonds to £30,000 per person since 2003. This cap will now be raised as follows:- From 1 June 2014: £40,000
- From 2015/16: £50,000
National Insurance
Employees
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 not contracted out | 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.
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
As announced in December 2013 the 36 month tax free period when a person's main home is sold, is reduced to 18 months for most disposals made after 5 April 2014. Where the home owner or their spouse is disabled or has moved into a residential care-home, the 36 month tax free period will still apply.
The Government will consult on how to charge capital gains tax on disposal of UK homes by individuals who are not tax resident in this country.
Rollover Relief
Disposals of payment entitlements by farmers under the EU Basic Payment Scheme will qualify for business asset rollover relief with retrospective effect from 20 December 2013.
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 |
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