Income tax

Income Tax Rates

Income Tax 2017/18 2016/17
Starting rate limit (savings income) *£5,000 *£5,000
Starting rate *0% *0%
Basic rate band - income up to **£33,500 £32,000
Basic rate 20% 20%
Dividend ordinary rate ***7.5% ***7.5%
Higher rate - income over **£33,500 £32,000
Higher rate 40% 40%
Dividend upper rate ***32.5% ***32.5%
Additional rate - income over £150,000 £150,000
Additional rate 45% 45%
Dividend additional rate ***38.1% ***38.1%

* If an individual's taxable non-savings income exceeds the starting rate limit, then the starting rate will not be available for savings income. £1,000 of savings income for basic rate taxpayers (£500 for higher rate) may be tax-free.

** Scottish taxpayers are liable on non-savings income and non-dividend income at 20% income tax up to £31,500, 40% between £31,501 to £150,000 and then 45%.

*** The first £5,000 of dividends are tax-free.

Personal allowances

  2017/18 2016/17
Personal allowance 1 £11,500 £11,000
Blind person's allowance   £2,320 £2,290
Married couple's allowance (MCA)
Either partner born before 6 April 1935 (relief restricted to 10%) 2 £8,445 £8,355
Transferable tax allowance ('Marriage Allowance')
For certain married couples and civil partners born after 5 April 1935 (relief 20%) 3 £1,150 £1,100

Tax Shelters

Type 2017/18 2016/17
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

Notes

  1. Where adjusted net income exceeds £100,000, PA is reduced in the same way until it is nil regardless of the individual's date of birth.
  2. Allowances are reduced by £1 for every £2 that adjusted net income exceeds £28,000 (£27,700 2016/17) to a minimum MCA of £3,260 (£3,220 2016/17).
  3. Available to spouses/civil partners born after 5 April 1935, the allowance is 10% of the standard personal allowance. 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. Relief is given as a tax reduction at 20% of the transferred amount.