Tax rates and allowances

‘All the latest tax rates and figures, including income tax, CGT and much more.

Income Tax

Income tax rates
Other than savings and dividend income.

2018/19

Band (£) Rate (%)
0-34,500 20
34,501-150,000 40
Over 150,000 45

 

Savings income

Savings income 2018/19 and 2017/18
Starting rate 0%
Starting rate limit for savings £5,000

Not available if the taxable non-savings income exceeds the starting rate band. £1,000 of savings income for basic rate taxpayers (£500 for higher rate) may be tax free.

Dividend Income

Rate 2018/19 and 2017/18 (%)
Ordinary 7.5
Upper 32.5
Additional 38.1

The first £2,000 (£5,000 2017/18) of dividends are tax free.


Personal allowances

Allowance Type 2018/19 (£) 2017/18 (£)
Personal Allowance* 11,850 11,500
Marriage Allowance** 1,190 1,150
Married couple’s allowance (MCA) (relief 10%)

Either partner born before 6 April 1935

8,695 8,445
Blind person’s allowance 2,390 2,320

*(Reduce personal allowance by £1 for every £2 of adjusted net income over £100,000.)
10% of the PA may be transferable between certain spouses where neither pay tax above the basic rate, known as the marriage allowance.
** Reduce MCA by £1 for every £2 of adjusted net income over £28,900 (£28,000).

Inheritance tax
2018/19 2017/18
Standard threshold £325,000 £325,000

A further nil rate band of £125,000 may be available in relation to current or former residences. Nil rate bands of surviving spouses/civil partners may be increased by unused nil rate bands of deceased spouses/civil partners.

 

Rate of tax on balance
Chargeable lifetime transfers 20% 20%
Transfers on, or within 7 years of, death* *40% *40%

* A lower rate of 36% applies where 10% or more of a deceased person’s net estate is left to charity.

All lifetime transfers not covered by exemptions and made within seven years of death will be added back into the estate for the purpose of calculating the tax payable. Tax attributable to such transfers is then subject to Taper Relief:

Years before death 0-3 3-4 4-5 5-6 6-7
Tax reduced by 0% 20% 40% 60% 80%

Main Reliefs

Business property %
Business or interest therein 100%
qualifying shareholdings in unquoted* companies 100%
land, buildings, machinery, or plant used by transferor’s controlled company or partnership 50%

 

Agricultural property %
Agricultural property relief 50% or 100%

* Unquoted companies include those listed on AIM

Main Exemptions
Most transfers between spouses and civil partners.
The first £3,000 of lifetime transfers in any tax year plus any unused balance from the previous year.
Gifts of up to but not exceeding £250 p.a. to any number of persons.
Gifts in consideration of marriage or civil partnership of: up to £5,000 by a parent, up to £2,500 by a grandparent or great-grandparent, or up to £1,000 by any other person.
Gifts made out of income that form part of normal expenditure and do not reduce the standard of living.
Gifts to charities, whether made during lifetime or on death.

Mileage Allowances

It is quite normal practice for employees to be reimbursed at a reasonable mileage rate for business use of their own vehicles.

A statutory system of Approved Mileage Allowance Payments (AMAPs) applies to employees using their own vehicles for business journeys, as follows:

Vehicle Type Per Mile
Car/van first 10,000 miles in the tax year 45p
Motorcycles 24p
Bicycles 20p

Unless the employee is reimbursed at a rate higher than the AMAP, the payments do not need to be reported on a P11D. If the employer pays less than these rates, it is possible for the employee to claim income tax relief for the shortfall.

Rates of up to 5p per mile, per passenger, are also tax and NICs free when paid for the carriage of fellow employees on the same business trip. This now covers volunteers who drive for hospital car services etc, even though they are not strictly employees.

Capital gains tax

Capital gains tax rates and bands for 2018/19

 

On chargeable gains Amount
Total taxable gains and income up to higher rate threshold 10%*
Total taxable gains and income from higher rate threshold 20%*
Trust rate 20%*

*Higher rates (18%/28%) may apply to the disposal of certain residential property and carried interest.

 

Annual exemption
Individuals £11,700
Most Trustees £5,850

Transfers between spouses or civil partners living together are generally exempt.
Entrepreneurs’ Relief and Investors’ Relief
Qualifying gains will be taxed at 10%. Claims may be made on more than one occasion up to a ‘lifetime’ total of £10 million per relief.

Corporation tax
Financial year to 31 March 2019 31 March 2018
Corporation tax rate 19% 19%
Capital Allowances
Plant and Machinery %
Investment for use in Enterprise Zones, energy saving and environmentally beneficial equipment, new low CO2 emission cars (up to 50g/km from 1 April 2018) cars, natural gas / hydrogen refuelling equipment: first year allowance (FYA) 100%
Annual investment allowance (AIA) – on the first £200,000 of investment (excludes cars and other expenditure already qualifying for 100% FYA) 100%
Writing down allowance on expenditure not qualifying for AIA or FYA Long-life assets, integral features of buildings, cars over 110g/km from 1/6 April 2018 8%
Other plant and machinery 18%