|Tax bands and rates||2016/17||2015/16|
|Basic rate band||£32,000||£31,785|
|Basic tax rate||20%||20%|
|Dividend ordinary tax rate||7.5%||10%|
|Savings starting rate band||£5,000*||£5,000*|
|Savings starting rate - savings income||0%||10%|
|Higher rate band||£32,001 - £150,000||£31,786 - £150,000|
|Higher tax rate||40%||40%|
|Dividend upper tax rate||32.5%||32.5%|
|Additional rate band over||£150,000||£150,000|
|Additional tax rate||45%||45%|
|Dividend additional tax rate||38.1%||37.5%|
|Personal allowances||Those born after 5 April 1948||£11,000||£10,600|
|Those born after 5 April 1938 and before 6 April 1948||£11,000||£10,600|
|Those born before 6 April 1938||£11,000||£10,660|
|Married couples/civil partners||Transferable allowance||£1,100||£1060|
|Blind person's allowance||£2,290||£2,290|
|Married couple's allowance (MCA)||Maximum amount||£8,355||£8,355|
|Tax reduction at 10%||£835.50||£835.50|
|Applies after UK residence in 7 or
more of the previous 9 tax years
|Applies after UK residence in at least 12 of the previous 14 years||£60,000||£60,000|
|Applies after UK residence in at least 17 of the last 20 years||£90,000||£90,000|
Enterprise investment scheme (EIS) up to
|Maximum amount for EIS carry back||£50,000||£50,000|
|Income tax relief rate||30%||30%|
|Seed enterprise investment scheme (SEIS)||£100,000||£100,000|
|Income tax relief||50%||50%|
|Venture capital trust (VCT)||£200,000||£200,000|
|VCT tax relief rate||30%||30%|
|Golden handshake maximum tax free||£30,000||£30,000|
|Rent a room - exempt on gross annual rent up to||£7,500||£4,250|
|Construction industry scheme - deduction rate|
|Standard rate - registered||20%||20%|
|Higher rate - not registered||30%||30%|
*Savings income falling into the first £5,000 may be taxed at 0% for certain low income earners.
2017 and beyond
The personal allowance for 2017/18 will be £11,500. The basic rate limit is to be increased to £33,500 for 2017/18 and the higher rate threshold will increase to £45,000 in 2017/18.
It is intended to increase the personal allowance to £12,500 and the higher rate threshold to £50,000, but no timetable for these increases has been announced. Once these limits have been attained they will, in future, be index linked by reference to the CPI (Consumer Prices Index).
Termination payments over £30,000 which are subject to income tax after April 2018 will also be subject to employers national insurance contributions.
Income tax will only be applied on the equivalent of an employee’s basic pay if the employee has not worked the notice period.
The first £30,000 of a termination payment will remain exempt from income tax and national insurance, subject to the existing rules on eligibility for the exemption.
From April 2017 there are 2 new income tax allowances of £1,000 each for trading and property income.
Individuals with trading income or property income below the level of the allowance will no longer need to declare or pay tax on that income. The trading income allowance will apply to certain miscellaneous income from providing assets or services.