Tax rates and allowances

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 (4% from April 2018), but the maximum is still 37%. Cars that meet the Real Driving Emissions Step 2 (RDE2) standard are exempt from the diesel supplement.

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

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

Car fuel benefit charge

Car fuel benefit charge multiplier.

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

Van fuel benefit charge

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.

Rates in pence per mile:

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).

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

Notes:
[1] The AIA is increased to £1m for two years from 1 January 2019
[2] This new allowance applies to expenditure under physical construction works entered into on or after 29 October 2018
[3] Reducing balance
[4] See enhanced capital allowance scheme (ECA)
[5] Transitional rules apply until 2020
[6] Extra credits are available - see below
[7] 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

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

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

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

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 and initially was based on the value of the property as at 1 April 2012 (or subsequent acquisition date). A new valuation was required as at 1 April 2017 for the 2018/19 charge and the following four years to 2022/23 inclusive.

ATED is charged for financial years (beginning on 1 April and ending on 31 March), not for fiscal years.

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

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.

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

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.

Notes:
[1] The additional deduction is in the addition to the claimed 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

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.

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

The VAT registration threshold is been frozen at £85,000 until April 2022.

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

SDLT is payable on land and property transactions in England and Northern Ireland. It applies to transactions in Wales up to 4 April 2018, from which date the Welsh land transaction tax (LTT) applies. In Scotland, the land and buildings transaction tax replaced SDLT from April 2015

Residential property

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

Rates for first time buyers (for properties worth £500,000 or less)

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

Non-residential property

Purchases and lease premiums

Leases

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

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

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 above the UEL in one job or above the UEL plus PT over two jobs, can apply to HMRC to defer 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 UEL for employees aged under 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.
[5] From April 2020 the EA will be restricted to employers with an employer NIC liability below £100,000 in their previous tax year.

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

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

The Apprenticeship Levy (AL) started on 6 April 2017 and applies to employers with a pay bill of over £3m. It is charged 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 are 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/guidance/pay-apprenticeship-levy

Notes:
[1] Different rates and thresholds apply to the earned income of Scottish taxpayers
[2] Rate on this band depends on the type of income: 7.5% on dividend income, 20% on all other income

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

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

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

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

Note:
[1] The RNRB is tapered by £1 for every £2 that the estate exceeds £2m.

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

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. 

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

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

Note:
[1] From 6 April 2017 a non-UK domiciliary will be deemed domiciled after 15 out of 20 years residence in the UK. Before that a £90,000 charge applied from 2015/16 for those resident in at least 17 out of the previous 20 tax years.

Find more information at: gov.uk/government

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.

Note:

1. Any amount over £1m must be invested in one or more knowledge-intensive companies

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

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.

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

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.

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

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.

Find more information at: gov.uk/individual-savings-accounts

Note:
[1] Unused relief can be brought forward from the previous three years and used after the current year allowance.
[2] Restricted to £4,000pa for all defined contribution schemes from the tax year after pension funds have been flexibly accessed.
[3] From 2016/17, the annual allowance is reduced by £1 for every £2 that adjusted income exceeds the threshold, up to a maximum reduction of £30,000. Where net income is below the net income threshold, the taper will not normally apply.

Find more information at: gov.uk/tax-on-your-private-pension

Repayment plan 1

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

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

Postgraduate loans

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

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

• Tax agent advisers guidance
• HMRC Working with Tax Agents blog
• Agent Account Managers (AAMs)
• Agent strategy
• Complaints
• Contact information
• Forms
• Manuals
• Online security advice
• Rates and allowances
• Service availability
• Specialist offices contact

• Reporting a change to your business to HMRC
• Reporting a change to your personal details to HMRC

Tips for searching the HMRC website for information and updates

• The advanced search in Google is useful to search HMRC website
• Sign up for a HMRC agent email alerts at the link on the top right of the Tax agent and advisers guidance page

• FATCA - Useful guidance on the Foreign Account Tax Compliance Act, US legislation with UK implications
• HMRC contact information - Useful HMRC contacts and links, all in one place
• PAYE and real time information (RTI) - More information and latest articles
• Tax Faculty TAXguides
• Tax Faculty representations
• Tax Forum - Report an issue, give a view, find an answer
• Tax News - Latest tax news and updates
• Join the Tax Faculty

Sign up for the ICAEW Tax Faculty free weekly newswire for updates and views on the latest tax news. Subscribe using the link on the right hand side of a news item.

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.