Rates and allowances

Looking for up-to-date rates and allowances? We've compiled some of the most popular ones for you below.

Taxable profits Year to 31/03/ 2017 Year to 31/03/ 2016
All 20% 20%
  2016/17 2015/16
Personal allowance – under 65 £11,000 £10,600
Personal allowance – 65 to 74 £11,000 £10,600
Personal allowance – over 75 £11,000 £10,600
  2016/17 2015/16
UK dividend income rate nil 10%
Starting rate band to £5000 £5000
Non-savings income tax rate 20% 20%
Savings income tax rate - only applicable where taxable non-savings income is under £5000 10% 10%
Basic rate band £32,000 £31,785
Non-savings income tax rate 20% 20%
Savings income tax rate 20% 20%
UK dividend income tax rate 7.5% 10%
Higher rate band £32,001 £31,786
UK dividend income tax rate 32.5% 32.5%
All other income tax rate 40% 40%
Additional rate band over £150,000 over £150,000
UK dividend income tax rate 38.1% 37.5%
All other income tax rate 45% 45%


The personal allowance is withdrawn at the rate of £1 for every £2 by which income exceeds £100,000. This means that the effective rate of tax on income between £100,000 and £122,000 is 60%.

  2016/17 2015/16
Nil rate band £325,000 £325,000
Rate of tax on balance:    
Chargeable lifetime transfers 20% 20%
Transfers on, or within seven years of death 40% 40%


All lifetime transfers not covered by exemptions and made within seven years of death are added back into the estate for the purposes of calculating the amount of tax payable. The rate of tax applying to these gifts, 40%, is progressively reduced the longer the period of survival after the making of the gift, as illustrated in the following table.

Charge on gifts made within seven years of death

Years before death 0-3 3-4 4-5 5-6 6-7
% of death charge 100% 80% 60% 40% 20%

Main exemptions

  2015/16
Transfers between UK domiciled husband and wife Exempt
Annual exemption - the first part of lifetime transfers in any tax year £3,000
Small gifts exemption - gifts of up to but not exceeding this amount to any number of persons £250 per annum
Gifts out of income - gifts made out of income that from part of normal expenditure and do not reduce the donor's standard of living No limit
Gifts in consideration of marriage
- gifts to bride and / or groom as follows
Parent Up to £5,000
Grandparent Up to £2,500
Any other person Up to £1,000
Gifts to charities - whether during lifetime or on death No limit
  2016/17 2015/16
Income Tax & Class 4 National Insurance    
First payment on account 31 Jan 2017 31 Jan 2016
Second payment on account 31 July 2017 31 July 2016
Balancing payment 31 Jan 2018 31 Jan 2017
Capital Gains Tax 31 Jan 2018 31 Jan 2017
Corporation Tax Nine months after the end
of the accounting period
Latest filing dates 2015/16 Returns
Self assessment tax returns 31 Jan 2017

The rates below apply from 1 October 2015 and are likely to change again on 1 October 2016.

Category of worker Hourly rate
Living wage 25 and above £7.20 (From 1st April 2016)
Aged 21 and above £6.70
Aged 18 to 20 inclusive £5.30
Aged under 18 (but above compulsory school age) £3.87
Apprentices in first year of their apprenticeship £3.30
  2016/17 rates
Class 1 (employed): Weekly earnings Employer Employee
Up to £155 (primary)   Nil*
Up to £156 (secondary) Nil*  
£156.01 - £827   12%**
Over £156.01 13.8%**  
Over £827 13.8%** 2%***
Class 1A (employers) 13.8% on employee taxable benefits
Class 1B (employers) 13.8% on PAYE Settlement Agreements
Class 2 (self-employed) Flat rate per week £2.80 (small earnings exception £5965 p.a.)
Class 3 (voluntary) Flat rate per week £13.25
Class 4 (self-employed) 9% on profits between £8060 and £43,000 plus 2% on profits over £43,000

*Entitlement to contribution-based benefits retained for earnings between £112 and £155 per week. **On earnings above £155. ***On earnings above £827.

Under the statutory scheme, the maximum tax free mileage allowances for employees using their own transport for business journeys are as follows:

  First 10,000 miles Miles over 10,000
Car / van 45p 25p
Motorcycle 24p 24p
Bicycle 20p 20p

If an employer pays a mileage rate higher than the statutory rate the employee is chargeable to income tax on the excess. If an employer pays a mileage rate lower than the statutory rate the employee can claim tax relief on the shortfall.

From 1 April 2016 1 April 2015
Standard rate 20% 20%
VAT fraction 1/6th 1/6th
Taxable turnover limits from 1 April 2015    
Registration - last 12 months or coming 30 days over £83,000 £82,000
Deregistration - coming year under £81,000 £80,000
Cash accounting scheme - up to £1,350,000 £1,350,000
Annual accounting scheme - up to £1,350,000 £1,350,000
Optional flat rate scheme - up to £150,000 £150,000

Where businesses buy fuel which has some degree of private use, they must account for output VAT on a scale charge. This is based on the CO2 emissions (rounded down to the next multiple of 5). The VAT chargeable for quarters commencing on or after 1 May 2015 is as follows:

CO2 in grams per kilometer VAT on charge at 20%
120 or less £22.17
125 £33.33
130 £35.50
135 £37.83
140 £40.00
145 £42.33
150 £44.50
155 £46.83
160 £49.00
165 £51.33
170 £53.33
175 £55.67
180 £57.83
185 £60.17
190 £62.33
195 £64.66
200 £66.83
205 £69.17
210 £71.33
215 £73.50
220 £75.83
225 and over £78.00
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