Income Tax
| Income tax rates |
1 |
2016/17 |
2015/16 |
| Starting rate limit (savings income) |
2 |
*£5,000 |
*£5,000 |
| Starting rate |
2 |
*0% |
*0% |
| Basic rate band - income up to |
£32,000 |
£31,785 |
| Basic rate |
20% |
20% |
| Dividend ordinary rate, otherwise taxable at basic rate |
***7.5% |
10% (0%**) |
| Higher rate - income over |
£32,000 |
£31,785 |
| Higher rate |
40% |
40% |
| Dividend upper rate, otherwise taxable at higher rate |
***32.5% |
32.5% (25%**) |
| Additional rate - income over |
£150,000 |
£150,000 |
| Additional rate |
45% |
45% |
| Dividend additional rate, otherwise taxable at additional rate |
***38.1% |
37.5%
(30.6%**) |
|
For 2016/17 Scottish taxpayers are effectively subject to the same income tax rates as the rest of the UK.
* If an individual's taxable non-savings income exceeds the starting rate limit, then the starting rate will not be available for savings income
For 2016/17, £1,000 of savings income for basic rate taxpayers (£500 for higher rate) may be tax-free.
** Effective rate with tax credit
*** For 2016/17 the first £5,000 of dividends are tax-free |
| Personal allowance (PA) |
|
|
| Born after 5 April 1938 |
3 |
£11,000 |
£10,600 |
| Born before 6 April 1938 |
4 |
£11,000 |
£10,660 |
| Income limit for PA |
3 |
£100,000 |
£100,000 |
| Income limit for PA (Born before 6 April 1938) |
4 |
£27,700 |
£27,700 |
| Blind person's allowance |
|
£2,290 |
£2,290 |
| Married couple's allowance (MCA) |
|
|
| Either partner born before 6 April 1935 (relief restricted to 10%) |
5 |
£8,355 |
£8,355 |
| Transferable tax allowance ('Marriage Allowance') |
|
|
| For certain married couples and civil partners born after 5 April 1935 (relief 20%) |
6 |
£1,100 |
£1,060 |
| 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 |
| Golden Handshake max. |
£30,000 |
£30,000 |
Notes
- From 2016/17 onwards, all individuals will be entitled to the same personal allowance, regardless of the individual’s date of birth.
- If an individual’s taxable non-savings income exceeds the starting rate limit, then the starting rate for savings will not be available for savings income.
- The personal allowance, including the minimum age-related allowance, is reduced by £1 for every £2 that adjusted net income exceeds £100,000, regardless of the individual’s date of birth.
- Personal allowances for those born before 5 April 1938 are reduced by £1 for each £2 of excess income over £27,700 until the basic allowance is reached.
- Similar limits apply to the married couple's allowance. The reduction in allowance is subject to a minimum level of £3,220. (For couples married before 5 December 2005, only the husband's income is taken into account. For those married on or after 5 December 2005 or in a civil partnership, only the higher earner’s income is taken into account).
- Available to spouses/civil partners born after 5 April 1935. The allowance is 10% of the personal allowance for those born after 5 April 1938. It allows a spouse or civil partner who is not liable to income tax above the basic rate to transfer this amount of their personal allowance to their spouse/civil partner. The recipient must not be liable to tax above the basic rate. The recipient is eligible to a tax reduction at 20% of the transferred amount.
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