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Tax rates and allowances

This guide provides a summary of key tax rates, allowances and reliefs for 2016/17 and 2017/18. It includes information on business taxes, indirect taxes, personal taxes, national insurance contributions and the apprenticeship levy.

Page last updated

25 May 2017

Additional and more detailed information can be found at the end of each section by following hyperlinks to HMRC guidance. We hope you find this guide useful but please let us know if you think anything else should be included by emailing the Tax Faculty

Click on the relevant section below to see the rates and allowances for 2016/17 and 2017/18.

Business tax

Car and van benefits

Car benefits

The car benefit is calculated at a percentage of the car’s list price when new. The list price includes accessories and is not subject to an upper limit. The list price is reduced for capital contributions made by the employee up to £5,000. Special rules may apply to cars provided for disabled employees.

The percentages are given in the table below and are based on the car's CO2 emissions in grams per kilometre up to a maximum of 37%. For diesel cars add a 3% supplement but the maximum is still 37%.

For cars registered before 1 January 1998 and cars with no agreed CO2 emissions the charge is based on engine size. 

CO2 emissions (grams per kilometre) % of car's list price taxed 2016/17 % of car's list price taxed 2017/18
Petrol engine  Diesel engine  Petrol engine  Diesel engine 
0-50 10  9 12
51-75 11  14  13 16
76-94 15  18  17 20
95-99 16  19  18 21
100-104  17  20  19 22
105-109 18 21 20 23
110-114 19 22  21 24
115-119 20 23  22 25
120-124 21  24  23 26
125-129 22 25  24 27
130-134 23 26  25 28
135-139 24 27  26 29
140-144 25 28  27 30
145-149 26 29  28 31
150-154 27 30  29 32
155-159 28 31  30 33
160-164  29  32  31 34
165-169 30  33  32 35
170-174 31  34  33 36
175-179 32  35  34 37
180-184 33  36  35 37
185-189 34  37  36 37
190-194 35  37  37 37
195-199 36  37  37 37
200 and over 37  37  37 37

Find more information at: gov.uk/expenses-and-benefits-company-cars 

Car fuel benefit charge

Car fuel benefit charge multiplier.

2016/17 2017/18 
£22,200 £22,600

Car fuel benefit applies if an employee has the benefit of private fuel for a company car. The benefit is calculated by applying the percentage used to calculate the car benefit to a 'fuel charge multiplier'. The charge does not apply to certain environmentally-friendly cars. The fuel benefit is reduced to nil only if the employee pays for all private fuel.

Find more information at: gov.uk/expenses-and-benefits-company-cars

Van and fuel benefits

Van benefit charge

  2016/17  2017/18 
Vans which emit CO2 £3,170  £3,230 
Vans which do not emit CO2 when driven £630  £646

Van fuel benefit charge

2016/17  2017/18 
£598  £610

Van benefit is chargeable if the van is available for an employee’s private use. The charges do not apply if a restricted private use condition is met throughout the year. A fuel benefit may also be chargeable if an employee has the benefit of private fuel paid for in respect of a company van.

Find more information at: gov.uk/expenses-and-benefits-company-vans

Advisory fuel rates for company cars

Advisory rates only apply where employers reimburse employees for business travel in a company car or require employees to repay the cost of fuel used for private travel in a company car.

If the rate paid per mile of business travel is no higher than the advisory rate for the particular engine size and fuel type of the car, HMRC will accept that there is no taxable profit and no Class 1 NIC liability.

Engine size Fuel type From 01/06/2015 From 01/09/15 From 01/12/15 From 01/03/16 From 01/07/17
1400cc or smaller Petrol  12p  11p  11p  10p 11p
1400cc or smaller LPG  8p  7p  7p  7p  7p
1600cc or smaller Diesel  10p  9p  9p  8p  9p
1401cc to 2000cc  Petrol  14p  14p  13p  12p  14p
1401cc to 2000cc  LPG  9p  9p  9p  8p  9p
1601cc to 2000cc Diesel  12p  11p  11p  10p  11p
Bigger than 2000cc  Petrol  21p  21p  20p  19p  20p
Bigger than 2000cc  LPG  14p  14p  13p  13p  14p
Bigger than 2000cc Diesel  14p  13p  13p  13p  13p

Find more information at: gov.uk/government/publications/advisory-fuel-rates

Mileage allowance payments (MAP)

MAP rates per business mile (for business travel in employee's own vehicle).

Cars and vans  Rate per mile
2016/17 2017/18
Up to 10,000 miles 45p  45p 
Over 10,000 miles  25p  25p 
Bicycles  20p  20p 
Motorcycles  24p  24p 

Find more information at: gov.uk/expenses-and-benefits-business-travel-mileage

Capital allowances
Plant and machinery From 01/01/16 2016/17 2017/18
Annual investment allowance of 100% on expenditure up to £200,000  £200,000 £200,000
Main writing down allowance rate 1 18%  18%  18% 
Special rate pool (long life assets and integral features within a building) 1 8%  8%  8% 
Energy saving/environmentally beneficial assets 2 100%  100%  100% 
Commercial or industrial building in an enterprise zone 3 100%  100%  100% 
Research and development 4 100%  100%  100% 
Business premises renovation allowance 5 100%  100%  N/A
Motor cars 6 2016/17 2017/18
Low emission less than or equal to 75g/km 100%  100% 
Emissions between 75/km or equal to 130g/km  18%  18% 
Emissions greater than 130g/km  8%  8% 

Notes:
[1] Reducing balance
[2] See enhanced capital allowance scheme (ECA)
[3] Transitional rules apply until 2020
[4] Extra credits are available - see below
[5] Regime ends 31 March 2017 for corporation tax and 5 April 2017 for income tax
[6] These rates apply to new cars. Second hand and electric cars with emissions equal to or below 130g/km can claim 18%

Find more information at: gov.uk/topic/business-tax/capital-allowances

Corporation Tax (CT)
Rates Financial year commencing 1 April 2016 Financial year commencing 1 April 2017
Main rate 20%  19%

Find more information at: gov.uk/topic/business-tax/corporation-tax

North sea oil and gas ring fenced profits rates Financial year commencing 1 April 2016 Financial year commencing 1 April 2017
Small profits rate (under £300,000)  19%  19% 
Main rate  30%  30% 
Main rate relief  11/400  11/400 
Supplementary rate charge 20% 1 10% 

Notes:
[1] Supplementary charge rate reduced to 10% for accounting periods starting on or after 1 January 2016.

Find out more at: gov.uk/guidance/oil-gas-and-mining-ring-fence-corporation-tax

Diverted profits tax
  2016/17 2017/18
Rate 25%  25% 

Find more information at: gov.uk/government/publications/diverted-profits-tax-guidance

Annual tax on enveloped dwellings (ATED)

Since 1 April 2013 ATED is payable by non-natural persons that own high value residential property. ATED does not apply to individuals or to entities which use residential property for a qualifying business purpose.

The amount of ATED is worked out using a banding system based on the value of the property as at 1 April 2012 (or subsequent acquisition date).

A new valuation will be required as at 1 April 2017 for the 2018/19, 2019/20, 2020/21, 2021/22 and 2022/23 charges.

Property value Charge for 2016/17 Charge for 2017/18 1
£500,001 to £1m £3,500  £3,500 
Over £1m to £2m £7,000  £7,050 
Over £2m to £5m £23,350  £23,550 
Over £5m to £10m  £54,450  £54,950 
Over £10m to 20m £109,050  £110,100 
Over £20m  £218,200  £220,350 

Note:
[1] The 2017/18 ATED charge is payable by 30 April 2017. 

Find more information at: gov.uk/guidance/annual-tax-on-enveloped-dwellings-the-basics

Patent box

Since 1 April 2013 profits from qualifying patent interests are taxed at 10%. This is phased in over five years. The rules were amended from 1 July 2016 to make the regime compliant with the new international nexus approach.

Year commencing 1 April 2014 2015 2016 From 2017
Percentage of benefits available 70% 80% 90% 100%

Find more information at: gov.uk/guidance/corporation-tax-the-patent-box

Research and development relief

Research and development (R&D) relief is a company tax relief that can either reduce a company's tax bill or provide a cash sum paid by HMRC. It is based on the company’s expenditure on R&D projects that seek an advance in science or technology. The activities that constitute R&D for tax purposes are defined within special BIS guidelines.

The R&D tax credit works by allowing companies an increased or enhanced deduction in respect of qualifying expenditure on R&D activities.

Additional deduction above costs[1] 1 April 2016 1 April 2017
SMEs  130%  130% 
SME expenditure credit[2] 14.5%  14.5% 

Notes:
[1] The additional deduction is in the addition to the claiming cost.
[2] SMEs that make losses can surrender the deduction in exchange for payment

Find more information at: gov.uk/guidance/corporation-tax-research-and-development-rd-relief

Research and development expenditure credit (RDEC)

Finance Act 2013 introduced an 'above the line' credit at a rate of 10% for large companies for research and development (R&D) expenditure incurred on or after 1 April 2013. The expenditure credit scheme will run alongside the current large company scheme until 31 March 2016 when the large scheme will cease.

  From 1 April 2016 From 1 April 2017
Credit 11%  11% 

Find more information at: gov.uk/guidance/corporation-tax-research-and-development-rd-relief

Apprenticeship Levy

The Apprenticeship Levy (AL) is a new tax, which started on 6 April 2017, on employers with a pay bill of over £3m. It will be payable at the rate of 0.5% of the pay bill.

The ‘pay bill’ is amounts on which Class 1 secondary NIC is calculated, so runs from £nil, not from the lower earnings limit or NIC secondary threshold.

Employers will be entitled to an annual levy allowance (LA) of £15,000 to set against the levy.

They can use one twelfth of the levy allowance per tax month on a cumulative basis; unused levy allowance can be carried forward and used in a later month within the same year.

Connected employers, connected charities and single employers with more than one PAYE scheme have to decide at the start of the tax year how to share the LA between their PAYE schemes.

Find more information at: gov.uk/government/publications

Indirect taxes

Stamp duty land tax (SDLT)

SDLT is payable on land and property transactions in the UK

Residential property

Property value Rate[1] Rate from 1 April 2017 on purchase of additional property [1]
£0-£125,000  Nil  3% 
£125,001-£250,000  2%  5%
£250,001-£925,000  5%  8%
£925,001-£1.5m 10% 13%
Over £1.5m 12% 15%

Notes:
[1] On the portion of value above the threshold (slice system)

Non-residential property

Purchases and lease premiums

Property value  Up to 16 March 2016[1] Property value  On or after 17 March 2016[2]
£0-£150,000  Nil  £0-£150,000  Nil 
£150,001-£250,000  1%  £150,001-£250,000  2% 
£250,001-£500,000  3%  Over £250,000  5% 
Over £500,000  4%     

Notes:
[1] On entire property value (slab system).
[2] On the portion of the value above the threshold (slice system).

Leases

 

Net present value (NPV) of the lease Up to 16 March 2016 Net present value (NPV) of the lease On or after 17 March 2016
£0-£150,000  Nil  £0-£150,000  Nil 
Over £150,000  1%  £150,001-£5m  1% 
 
Over £5m  2% 

Find more information at: gov.uk/topic/business-tax/stamp-taxes

Value added tax (VAT)
Rates and limits From 1 April 2016 From 1 April 2017
Standard rate  20%  20% 
Reduced rate  5%  5% 
Annual registration limit £83,000  £85,000
Annual de-registration limit £81,000  £83,000
Cash and annual accounting scheme turnover limit £1.35m  £1.35m 
Cash or annual accounting - exit turnover limit  £1.6m  £1.6m 
Flat rate schemes - entry turnover limit  £150,000  £150,000 
Flat rate schemes - exit turnover limit  £230,000  £230,000 

Find out more at: gov.uk/topic/business-tax/vat

National Insurance Contributions (NIC)

Rates, thresholds and reliefs
Rates - Class 1 Employer and Employee  2016/17 2017/18
Thresholds (per week)  
Lower earnings limit (LEL) (employees and employers) £112  £113
Primary threshold (PT) (employees) £155 £157
Secondary threshold (ST) (employers) £156 £157
Upper earnings limit (UEL) (employees only) £827  £866
Rates - Class 1 Employer and Employee  2016/17 2017/18
Employee rates  
Earnings between LEL and PT 1 0% 0%
Earnings between PT and UEL 1 12% 12%
Deferred rate for certain employees with more than one job 2 2% 2%
Earnings above UEL  2%  2% 
Employer rates  
Earnings between LEL and ST 0% 0%
Above ST 3 13.8% 13.8%
Employment allowance  
Employment allowance (EA) - per business - offset against employer's Class 1 NICs 4 £3,000  £3,000 
Other employer rates  
Class 1A - on employer-provided benefits-in-kind 13.8% 13.8%
Class 1B - on PAYE settlement agreements 13.8% 13.8%

Notes:
[1] NIC paid on earnings between LEL and UEL accrue entitlement to state pension and other contributory state benefits.
[2] Employees with more than one job with earnings > UEL in one job or > UEL + PT over two jobs can apply to HMRC to defer (= delay) paying Class 1 at the full rate.  See guidance at gov.uk/defer-national-insurance 
[3] Employers pay 0% Class 1 secondary NIC on earnings up to the upper earning limit for employees aged below 21 and apprentices aged under 25.
[4] Connected companies, connected charities and/or employers with more than one PAYE scheme have only one EA between them.

For further data see gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions

Rates - other 2016/17 2017/18
Class 2 (self-employed flat rate) 1    
Per week  £2.80  £2.85
Small earnings exception (per year) £5,965  £6,025
Share fisherman (per week)  £3.45  £3.50
Voluntary development workers (per week) £5.60  £5.65
Class 3 (voluntary) 1    
Per week £14.10
£14.25
Class 4 (self-employed)  
Lower profits limit LPL (per year) £8,060 £8,164
Upper profits limit UPL (per year) £43,000 £45,000
Rate   
Between LPL and UPL  9%  9% 
Above UPL  2%  2% 

Note:
[1] Accrues entitlement to state pension and other contributory state benefits.

Find more information at: gov.uk/national-insurance and gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions

Personal tax

Income tax rates and allowances
Rates 2016/17 2017/18
Basic rate of 20% on income up to... £32,000  £33,500
Higher rate of 40% on income... £32,001 to £150,000 £33,501 to £150,000
Additional rate on income over £150,000 45%  45% 
Starting rate of 0% limited for savings up to  £5,000  £5,000 
Dividends: Basic rate taxpayers  7.5%  7.5% 
Higher rate taxpayers  32.5%  32.5% 
Additional rate taxpayers  38.1%  38.1% 
Trust rate  45%  45% 
Trust rate on first £1,000 1 20%  20% 
Trust rate on dividends  38.1%  38.1%

Notes:
[1] Depends on the type of income

Find out more information at: gov.uk/government/publications

Personal allowances 2016/17  2017/18
Personal allowance £11,000  £11,500
Income limit for personal allowance 1 £100,000 £100,000
Married couple's/civil partnership allowance 1, 2

- Maximum amount £8,355  £8,445
- Minimum amount  £3,220  £3,260
Income limit for married couple's/civil partnership allowance (born before 06/04/1938)  £27,700 £28,000
Marriage allowance 3 £1,100  £1,150 
Blind person's allowance  £2,290  £2,320
Trading allowance N/A £1,000
Property allowance N/A £1,000

Savings and investments 2016/17 2017/18
Dividend allowance £5,000 £5,000
Personal savings allowance:
- basic rate taxpayers £1,000 £1,000
- higher rate taxpayers £500 £500
- additional rate taxpayers £nil £nil

Notes:
[1] £1 reduction for every £2 of additional income over the income threshold.
[2] Relief at 10% if at least one of the couple was born before 06/04/35.
[3] The allowance is transferable between spouses or civil partners who were both born after 5 April 1935. It can only be transferred where neither the transferor nor the transferee is liable to income tax above the basic rate.

Find more information at: gov.uk/topic/personal-tax/income-tax

Capital gains tax (CGT)
Tax rates - individuals 2016/17 2017/18
Standard rate  10%  10% 
Higher rate  20%  20% 
Standard rate for gains on residential property and carried interest 18%  18% 
Higher rate for gains on residential property and carried interest 28%  28% 
Trust rate  20%  20% 
Trust rate for gains on residential property  28%  28% 
Exemptions 2016/17 2017/18
Individuals, PRs and some trustees £11,100  £11,300
Most trustees  £5,500  £5,650
Chattels exemptions: proceeds up to 1 £6,000  £6,000

Notes:
[1] For consideration over £6,000 the chargeable gain is limited to five-thirds of excess over £6,000

Rates for investors 2016/17 2017/18
Entrepreneurs' Relief

- Relief rate  10%  10%
- Lifetime limit  £10m  £10m
Investors' Relief
   
- Relief rate 10%  10% 
- Lifetime limit £10m  £10m 

Find more information at: gov.uk/topic/personal-tax/capital-gains-tax

Inheritance tax (IHT)
Rates 2016/17 2017/18
IHT nil rate £325,000 £325,000
Residential nil rate band (RNRB) N/A £100,000
Lifetime rate 20%  20% 
Death rate 40%  40% 
Lower rate when 10% or more of estate is left to a charity 36%  36% 
IHT reliefs for lifetime gifts 2016/17 2017/18
Annual exemption  £3,000  £3,000 
Small gifts  £250  £250 
Marriage:     
- Parent  £5,000  £5,000 
- Grandparent  £2,500  £2,500 
- Bride/groom  £2,500  £2,500 
- Other  £1,000  £1,000 
Reduced tax charge on gifts within 7 years of death
Years before death  0-3 3-4 4-5 5-6 6-7
% of death rate tax  100 80 60 40 20

Note: IHT free transfers from a UK domiciled spouse to a non UK domiciled spouse are restricted to an amount equivalent to the nil rate band. From April 2013 a non UK domiciled spouse can elect to be UK domiciled for IHT purposes.

Find more information at: gov.uk/inheritance-tax

High income child benefit charge

Child benefit is receivable by a person responsible for each child until they reach 16, or 20 if they stay in education or training.

If the person (or their spouse or partner) has adjusted net income above £50,000, the person with the highest income has an income tax charge.

If their adjusted net income is more than £60,000 a year, the tax charge equals the child benefit received and the charge is 1% of benefit for each £100 of income between £50,000 and £60,000. High income child benefit charge applies from January 2013. 

  Child benefit per week 
Eldest/only child £20.70
Other children £13.70

Find out more at: gov.uk/child-benefit-tax-charge/overview

Remittance basis charge

For an adult non-UK domiciliary after UK residence in:

  2016/17 2017/18
At least seven of the previous nine tax years £30,000 £30,000
At least 12 of the previous 14 tax years £60,000 £60,000
At least 17 years of the previous 20 tax years £90,000  N/A1

Note:
[1] From 6 April 2017 non-UK domiciliary will be deemed resident after 15 out of 20 years in the UK.

Find more information at: gov.uk/government/publications

Enterprise investment scheme (EIS)

The enterprise investment scheme (EIS) is designed to help smaller high-risk trading companies to raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies.

  2016/17 2017/18
Income tax relief 30% 30% 
Limit of relief  £1m £1m
EIS eligible for CGT deferral relief No limit No limit 

Find more information at: gov.uk/business-tax/investment-schemes

Seed EIS (SEIS)

SEIS is designed to help small, early-stage companies to raise equity finance by offering a range of tax reliefs to individual investors who purchase new shares in those companies.

It complements the existing enterprise investment scheme (EIS) which will continue to offer tax relief to investors in higher-risk small companies. SEIS is intended to recognise the particular difficulties which very early stage companies face in attracting investment, by offering tax relief at a higher rate than that offered by the existing EIS.

SEIS apply for shares issued on or after 6 April 2012. The rules have been designed to mirror those of EIS as it is anticipated that companies may want to go on to use EIS after an initial investment under SEIS.

  2016/17 2017/18
Income tax relief 50%  50% 
Limit of relief  £100,000 £100,000
SEIS/CGT reinvestment relief 50%  50% 

Find more information at: gov.uk/guidance/seed-enterprise-investment-scheme-background

Venture capital trusts (VCTs)

The VCT scheme is designed to encourage individuals to invest indirectly in a range of small higher-risk trading companies whose shares and securities are not listed on a recognised stock exchange.

VCT shares issued after 5 April 2006 need only be held for five years to retain the initial income tax relief and capital gains tax deferral.

  2016/17 2017/18
Relief 30%  30% 
Limit of relief £200,000 £200,000

Find more information at: gov.uk/topic/business-tax/investment-schemes

Individual savings accounts (ISAs)

ISAs are tax favoured savings and investment accounts that can be used to save cash, or invest in stocks and shares.

Income and gains on ISA investments are tax-free but capital losses cannot be used against non-ISA gains.

ISA limits 2016/17  2017/18
Annual investment limit £15,240  £20,000
Junior ISA/Child Trust Fund £4,080  £4,128

Find more information at: gov.uk/apply-tax-free-interest-on-savings

Pensions contributions
  2016/17 2017/18
Annual allowance 100% of salary up to... £40,000 £40,000
Permitted gross contribution (irrespective of salary) £3,600  £3,600 
Lifetime allowance  £1m £1m
Annual allowance charge on excess  20-45%  20-45% 
Tapered annual allowance threshold (applies to income including pension contributions over this threshold) 1 £150,000  £150,000 
Net income threshold 1 £110,000  £110,000 

Note:
[1] From 2016/17, annual allowance reduced by £1 for every £2 that adjusted income exceeds threshold up to maximum reduction of £30,000. Where net income is below the net income threshold, the taper will not normally apply.

Student loan recovery

Repayment plan 1

Rate or threshold 2016/17 2017/18
Employee earnings threshold at which repayment of student loan begins £17,495 per year
£1,457 per month
£336 per week
£17,495 per year
£1,457 per month
£336 per week
Rate of student loan deductions[1] 9% 9%

Notes:
[1] Only charged on income in excess of threshold.

Repayment plan 2 (course started on or after 1 September 2012)

Rate or threshold 2016/17 2017/18 
Employee earnings threshold at which repayment of student loan begins £21,000 per year
£1,750 per month
£404 per week
£21,000 per year
£1,750 per month
£404 per week
Rate of student loan deductions 9%[1] 9%[1]

Notes:
[1] Only charged on income in excess of threshold.

Find more information at: gov.uk/new-employee/student-loans

HMRC and ICAEW useful information

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