New Tax Year Alowances

Andrew Makin Useful Resources

Bands of taxable income and corresponding tax rates

2015-162016-17
% of income/£ per year
Basic rate20%20%
Higher rate40%40%
Additional rate45%45%
Starting rate for savings income 10%0%
Dividend ordinary rate – for dividends otherwise taxable at the basic rate (effective rate with tax credit)210% (0%)7.5%
Dividend upper rate – for dividends otherwise taxable at the higher rate (effective rate with tax credit) 232.5% (25%)32.5%
Dividend additional rate – for dividends otherwise taxable at the additional rate (effective rate with tax credit) 237.5% (30.6%)38.1%
Starting rate limit (savings income)1£5,000£5,000
Basic rate band£0-31,785£0-32,000
Higher rate band£31,786-£150,000£32,001-150,000
Additional rate bandOver £150,000Over £150,000

Income tax allowances

Income tax allowances 2016-17

2016-17
% of income/£ per year
Personal allowance:
Personal Allowance10£11,000
Income limit for personal allowance10£100,000
Income limit for married couple’s allowance11£27,700
Marriage allowance:
Marriage allowance12 13£1,100
Married couple’s allowance for those born before 6 April 1935:
Maximum amount of married couple’s allowance14 15 16£8,355
Minimum amount of married couple’s allowance14 15 16 17£3,220
Blind person’s allowance:
Blind person’s allowance16£2,290
Dividend allowance:
Dividend allowance18£5,000
Personal savings allowance:
Personal savings allowance for basic rate taxpayers19£1,000
Personal savings allowance for higher rate taxpayers19£500

National Insurance contribution thresholds

2015-162016-17
£ per week£ per week
Weekly Lower Earnings Limit (LEL)20112112
Weekly Primary Threshold (PT)20155155
Weekly Secondary Threshold (ST)21156156
Upper Earnings Limit (UEL)815827
Upper Profits Limit (UPL)42,385 per year43,000 per year
Upper Secondary Threshold for U21’s815827
Small Profits Threshold (SPT)20 225,965 per year5,965 per year
Lower Profits Limit (LPL)8,060 per year8,060 per year
Employment Allowance2,000 (per year, per employer)3,000 (per year, per employer)
Apprentice Upper Secondary Threshold (AUST) for under 25s23827

Class 1 National Insurance contribution rates 2016-17

Employee (Primary)
Earnings (£ a week)24NIC rate (%)
Below £112 (LEL)0
£112-155 (PT)250
£155-827 (UEL)12
Above £8272
Employer (Secondary)
Earnings (£ a week)24NIC rate (%)
Below £156 (ST)0
Above £156 (ST)13.8

Self-employed National Insurance contribution rates 2016-17

Annual Profits (£ a year)26Class 2 (£ a week)27Class 4 (%)
Below £5,965 (SPT)280.000
£5,965 to £8,060 (LPL)2.800
£8,060 to £43,000 (UPL)2.809
Above £43,0002.802

Other NICs rates

2015-162016-17
Married Women’s reduced rate (%)295.85%5.85%
Special Class 2 rate for share fishermen30£3.45 per week£3.45 per week
Special Class 2 rate for volunteer development workers30£5.60 per week£5.60 per week
Class 3 rate30 31£14.10 per week£14.10 per week

Working and Child Tax Credit rates and thresholds

Working Tax Credit

2015-162016-17Change
£ a year£ a year
Basic element1,9601,9600
Couple and lone parent element2,0102,0100
30 hour element8108100
Disabled worker element2,9702,9700
Severe disability element1,2751,2750
Childcare element
maximum eligible cost for one child£175 per week£175 per week0
maximum eligible cost for two or more children£300 per week£300 per week0
% of eligible costs covered (%)70%70%0

Child Tax Credit

2015-162016-17Change
£ a year£ a year
Family element5455450
Child element2,7802,7800
Disabled child element3,1403,1400
Severely disabled child element1,2751,2750

Income thresholds and withdrawal rates

2015-162016-17Change
£ a year£ a year
Income threshold6,4206,4200
Withdrawal rate (%)41410
First threshold for those entitled to Child Tax Credit only16,10516,1050
Income rise disregard5,0002,5002,500
Income fall disregard2,5002,5000

Child Benefit and Guardian’s Allowance

2015-162016-17Change
£ a year£ a year
Child Benefit
First Child20.7020.700
Second and subsequent children13.7013.700
Guardian’s Allowance16.5516.550

Tax-free Savings Account

2015-162016-17
£ a year£ a year
Individual Savings Account (ISA) subscription limit15,24015,240
Junior ISA subscription limit4,0804,080
Child Trust Fund (CTF) subscription limit4,0804,080

Fuel benefit charge

2015-162016-17
Car fuel benefit charge multiplier22,10022,200
Van fuel benefit charge594598

Van benefit charge

2015-162016-17
Van benefit charge3,1503,170
  1. From 2008-09 there is a starting rate for savings income only. If an individual’s taxable non-savings income exceeds the starting rate limit, then the starting rate for savings will not be available for savings income. 2

  2. From April 2016 the dividend tax credit will be abolished and replaced with a new £5,000 tax-free Dividend Allowance. 2 3

  3. This allowance is subject to the £100,000 income limit which applies regardless of the individual’s date of birth. The individual’s personal allowance is reduced where their income is above this limit. The allowance is reduced by £1 for every £2 above the limit. 2 3

  4. This allowance is subject to the £27,700 income limit. The individual’s personal allowance is reduced where their income is above this limit. The allowance is reduced by £1 for every £2 above the limit but is not reduced below £10,600 (unless the £100,000 income limit applies – see note 3). 2

  5. This transferable allowance is available to married couples and civil partners who are not in receipt of married couple’s allowance. A spouse or civil partner who is not liable to income tax; or not liable at the higher or additional rate, can transfer this amount of their personal allowance to their spouse or civil partner. The recipient must not be liable to income tax at the higher or additional rate.

  6. The relief for this allowance is given at 20%.

  7. This allowance is subject to the £27,700 income limit. The individual’s married couple’s allowance is reduced by £1 for every £2 above the limit. That reduction only applies after any reduction to their personal allowance (see note 2). The individual’s married couple’s allowance is never reduced below the minimum amount. 2

  8. The relief for this allowance is given at 10%. 2

  9. This is the maximum relief for maintenance payments where at least one of the parties was born before 6 April 1935.

  10. From 2016-17 onwards, all individuals will be entitled to the same personal allowance, regardless of the individuals’ date of birth. This allowance is subject to the £100,000 income limit which applies regardless of the individual’s date of birth. The individual’s personal allowance is reduced where their income is above this limit. The allowance is reduced by £1 for every £2 above the limit. 2

  11. This allowance is subject to the £27,700 income limit. The individual’s personal allowance is reduced where their income is above this limit. The allowance is reduced by £1 for every £2 above the limit but is not reduced below £10,600 (unless the £100,000 income limit applies – see note 10).

  12. This transferable allowance is available to married couples and civil partners who are not in receipt of married couple’s allowance. A spouse or civil partner who is not liable to income tax; or not liable at the higher or additional rate, can transfer this amount of their personal allowance to their spouse or civil partner. The recipient must not be liable to income tax at the higher or additional rate.

  13. The relief for this allowance is given at 20%.

  14. This allowance is subject to the £27,700 income limit. The individual’s married couple’s allowance is reduced by £1 for every £2 above the limit. That reduction only applies after any reduction to their personal allowance (see note 11). The individual’s married couple’s allowance is never reduced below the minimum amount. 2

  15. The relief for this allowance is given at 10%. 2

  16. These amounts are subject to indexation – the annual increase in CPI – and have been frozen for 2016-17 at 2015-16 levels in order to prevent any cash loss to individuals as a result of negative growth in CPI. 2 3

  17. This is the maximum relief for maintenance payments where at least one of the parties was born before 6 April 1935.

  18. From April 2016, the new Dividend Allowance means that individuals will not have to pay tax on the first £5,000 of dividend income they receive.

  19. From April 2016, the new Personal Savings Allowance means that basic rate taxpayers will not have to pay tax on the first £1,000 of savings income they receive and higher rate taxpayers will not have tax to pay on their first £500 of savings income. 2

  20. These thresholds are uprated by CPI. 2 3

  21. The Weekly Secondary Threshold is uprated by CPI.

  22. The Small Profits Threshold replaced the Small Earnings Exception on 6 April 2015.

  23. The Upper Secondary Threshold for Apprentices under 25 comes into effect on 6 April 2016.

  24. The limits are defined as LEL – lower earnings limit; PT – primary threshold; ST – secondary threshold; and UEL – upper earnings limit. 2

  25. No National Insurance contributions (NICs) are actually payable but a notional Class 1 NIC is deemed to have been paid in respect of earnings between LEL and PT to protect contributory benefit entitlement.

  26. The limits are defined as SPT – small profits threshold; LPL – lower profits limit and UPL – upper profits limit.

  27. Class 2 NICs are paid at a weekly flat rate of £2.80 by all self-employed persons unless they have profits below the small profits threshold. The rate is uprated by CPI.

  28. The self-employed may pay Class 2 contributions if their profits are below the SPT.

  29. Married Women’s Reduced Rate is paid only by married women and certain widows with valid reduced rate elections on earnings between PT and UEL and at 2% on earnings that exceed UEL.

  30. These rates are uprated by CPI. 2 3

  31. Class 3 NICs can be paid by contributors to make the year a qualifying year for basic State Pension, new State Pension and Bereavement Benefit purposes.